83 test bank for ethical obligations and decision making in accounting 3rd edition

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83 Test Bank for Ethical Obligations and Decision Making in Accounting 3rd Edition

by Mintz

Multiple Choice Questions

Under the IMA's standards of ethical practice, an accounting professional can consider informing authorities or individuals not employed by the organization when an ethical dilemma occurs about an accounting or financial reporting matter that remains unresolved if he/she:

1 A Believes there is a clear violation of the law

2 B Contacts his/her immediate superior who says to forget about the matter

3 C Informs the external auditors who tell him/her to inform the appropriate authorities

4 D Believes there has been an ethical violation

Each of the following characteristics describes the importance of integrity in decision making except for:

1 A Acting out of moral principle

2 B Being loyal to one's superior

3 C Having the courage to do the right thing

4 D Not subordinating professional judgment to others

Sally is the only student from a foreign country in an Auditing class On the day of the midterm exam, Sally asks the teacher whether she could use a dictionary to translate English words to her native tongue so she can better understand the questions What do you think the instructor should do if she follows the

ethical principle of justice?

1 A Allow Sally to use the dictionary since she is at a disadvantage

2 B Not allow Sally to use the dictionary because she should know enough English to get by

3 C Allow the other students to bring in some tool to give them an advantage

4 D None of these

The method of ethical reasoning that evaluates actions in terms of harms and benefits is:

1 A Act Utilitarianism

2 B Rights Theory

3 C Justice

4 D Virtue

The method of ethical reasoning that requires selecting the

correct moral rule that produces the greatest benefits over harms is:

1 A Act Utilitarianism

2 B Rule Utilitarianism

3 C Rights Theory

4 D Justice

The Public Interest Principle in the AICPA Code of Professional Conduct recognizes:

1 A The importance of integrity in decision making

2 B The importance of stakeholder groups

3 C The need to be independent of the client

4 D The importance of exercising objectivity in decision making

The ancient Greeks thought of the virtues as characteristics of behavior that:

1 A Could lead to a good life

2 B Make up the "six pillars of character"

3 C Support the rights theory

4 D All of these

The Rights Theory incorporates all of the following elements

except for:

1 A Act based on the consequences of one's actions on others

2 B Treat people as an end and not merely as a means to an end

3 C Act in a way you would want others to act in similar situations

4 D All of these

Each of the following elements make up an integral part of what is meant by "ethics" except for:

1 A Accepted standards of behavior

2 B Knowing the difference between right and wrong

3 C Always following the law

4 D The moral point of view

Respect is an important character of behavior because:

1 A It entails a loyalty obligation to one's superior

2 B It enables one to perform professional services competently

3 C It is critical to maintaining one's integrity

4 D It encompasses attributes of how we should treat others

Objectivity requires that a CPA should:

1 A Maintain a mental attitude of impartiality

2 B Maintain a mental attitude of intellectual honesty

3 C Be free of conflicts of interest

4 D All of these

What is the common characteristic of Aristotle's virtues and

ethical standards for CPAs?

1 A Truthfulness

2 B Integrity

3 C Loyalty

4 D Due care

Eddie paid an $8 restaurant check with a $10 bill The waitress gave him $12 back The most ethical action for Eddie is to:

1 A Keep the extra $10

2 B Inform the waitress of her overpayment

3 C Inform the manager of the restaurant of the overpayment

4 D Leave a larger tip for the waitress

Which of the following situations would be considered ethical?

1 A The cashier at Wal-Mart gives you $5 more than you were supposed to receive and you don't do anything about it

2 B You accidentally back into a car at Wal-Mart and leave your information for them to call

3 C Receiving fake $20 bills and using them in a store while knowing they are fake

4 D Finding a phone in a restaurant and keeping it

Teleology deals with

1 A Consequences of actions

2 B Fairness to others

3 C Respecting the rights of others

4 D Following prescribed virtue characteristics

The ethical reasoning method that is based on treating equals, equally and unequals, unequally is:

1 A Enlightened egoism

2 B Act utilitarianism

3 C Justice

4 D Virtue

Deontology deals with

1 A Emphasizes rights of others

2 B Consequences of actions

3 C Following prescribed virtue characteristics

4 D Following the law as an element of ethical behavior

Ethical relativism can best be described as a:

1 A Point of view that morality is relative to the norms of one's culture

2 B Concept that holds that integrity should be maintained in the face of pressure by others

3 C An ethical reasoning method that holds one should always act out of self-interest

4 D An ethical reasoning method that holds one should always consider the effect of one's actions on others

If one's reputation is tainted it may create a:

1 A Conflict of interests

2 B Loss of independence

3 C Lack of trust

4 D All of these

The biggest problem in applying virtue theory to decision making is:

1 A It can be difficult to evaluate the effect of virtues on others in decision making

2 B It relies on moral absolutes in decision making

3 C It can be difficult to determine virtues to distinguish equals from unequal claims in decision making

4 D Conflicts between virtues may make decision making more difficult

Jane finds a material misstatement while auditing a client's

accounts receivables Her senior tells her to ignore the

misstatement so that the client does not get upset Jane wants to

be viewed as a team player in order to advance in the firm So Jane follows her senior's instructions and ignores the

misstatement Which ethical theory did Jane use to make her decision?

1 A Egoism

2 B Justice

3 C Virtue ethics

4 D Utilitarianism

The method of ethical reasoning that does not deal with making decisions after considering the interests of others is:

1 A Egoism

2 B Enlightened Egoism

3 C Utilitarianism

4 D Rights Theory

The biggest problem in implementing a rights approach to

decision making is:

1 A The interests of others may be subservient to self-interests

2 B It is difficult to weigh harms and benefits

3 C It relies on moral absolutes

4 D It can be difficult to determine criteria to distinguish equals from unequal claims

Each of the following is a pillar of character according to the

Josephson Institute except for:

1 A Caring

2 B Citizenship

3 C Respect

4 D Judgmental

Each of the following describes the behavior of Cynthia Cooper in the WorldCom fraud except for:

1 A Persistence

2 B Competence

3 C Integrity

4 D Hesitance

A CPA would violate the Due Care Principle if he/she:

1 A Undertook a professional engagement without having the requisite background, knowledge and experience

2 B Discloses confidential information about a client

3 C Violates the Public Interest Principle

4 D Performs tax services for an audit client without audit committee

approval

Janice is a staff accountant in the accounting firm of Obama and Biden She is assigned to the audit of HealthCare Associates On

the very first day Janice noticed that the accounting manager of the client took money out of the petty cash fund and put it in his pocket The best action for Janice to take is:

1 A Ignore the situation because Janice doesn't know why the manager pocketed the money

2 B Inform her immediate supervisor of what she observed

3 C Tell another staff accountant who is a friend and ask for her advice

4 D Tell Obama or Biden

George is in the middle of a high stakes poker game when he notices what he thinks is cheating by another player It appears to George that this player took a card from his lap and switched it with a card that he was dealt If George is a utilitarian thinker, he should:

1 A Accuse the alleged cheater of cheating in front of all the other players

2 B Consider what might happen if he accuses the player of cheating and he

is wrong

3 C Speak to the alleged cheater during a regularly scheduled break and tell him not to do it again

4 D Forget about the whole matter

An accountant who blows the whistle on financial wrongdoing by his/her employer by going outside the entity violates:

1 A The due care principle

2 B Confidentiality

3 C One's reliability obligation

4 D All of these

Empathy entails all of the following characteristics of behavior except for:

1 A Being loyal to one's friends

2 B Being understanding of one's friends

3 C Being sensitive to the feelings of one's friends

4 D All of these

The credibility standard in the Statement of Ethical Professional Practice of the IMA requires that an accounting professional should:

1 A Communicate information fairly and objectively

2 B Disclose all relevant information that might affect the intended user's understanding of the reports, analyses or recommendations

3 C Disclose delays or deficiencies in information, timeliness, processing or internal controls in conformance with organization policy and the law

4 D All of these

The Independence Principle in the AICPA Code applies to:

1 A All accountants and auditors

2 B All CPAs regardless of professional services

3 C All CPAs who render attestation services

4 D All members of the audit committee

Treating other fairly encompasses treating them:

1 A Equally, impartially, and responsibly

2 B Equally, responsibly, and openly

3 C Impartially, openly, and diligently

4 D Equally, impartially, and openly

Responsibility goes hand in hand with:

1 A Respect

2 B Loyalty

3 C Courage

4 D Accountability

The biggest problem in implementing an utilitarian approach to decision making is:

1 A The interests of others may be subservient to self-interests

2 B It fails to consider the interests of others

3 C It can be difficult to evaluate the consequences of actions

4 D It relies on moral absolutes

When is it appropriate to contact the audit committee about a difference of opinion with the CFO over an accounting or financial reporting manner?

1 A If the CFO does not agree to correct the financial statements

2 B The CEO supports the CFO and does not agree to correct the financial statements

3 C The external auditors support the CEO and do not agree to correct the financial statements

4 D The audit committee should always be the first to be informed about such a difference of opinion

Each of the following is an element of trustworthiness according

to the Josephson Institute except for:

1 A Reliability

2 B Loyalty

3 C Fairness

4 D Honesty

Aristotle believed that always preceded the choice of action

1 A Empathy

2 B Due Care

3 C Deliberation

4 D Loyalty

An internal accountant should always consider taking each the following steps after exhausting all avenues of appeal within the organization when there is a difference of opinion with top

management on an accounting or financial reporting matter

except for

1 A Inform the SEC

2 B Terminate employment with the entity

3 C Seek legal advice before taking any action

4 D All of these

83 Free Test Bank for Ethical Obligations and Decision Making in Accounting 3rd Edition by Mintz Multiple Choice Questions - Page 2

The most important duty of public accounting is to the:

1 A Securities Exchange Commission

2 B Current stockholders

3 C Management

4 D Investing public

Egoists maintain a general principle of the following sort:

1 A "One ought always act in others' interest"

2 B "One ought always act in one's and others' interests"

3 C "One ought always act in peer group's interest"

4 D "One ought always act in one's own interest"

In the Lone Star School District case, the auditors were mostly concerned about:

1 A The behavior of a staff member toward client personnel

2 B The falsification of the financial statements

3 C The lack of independence of the audit team

4 D The lack of documentation for travel and entertainment expenses

When applying Utilitarianism to judge actions, what is the only thing that matters?

1 A Motives

2 B Justice

3 C Consequences

4 D Rights

The cultural value of Individualism reflects

1 A The degree a society reinforces individual or collective achievement

2 B Tolerance for uncertainty and ambiguity in society

3 C The degree of equality between people in a society

4 D Whether a society has a long-term or short-term orientation

The most likely rationalization a student might use to justify

cheating on an exam is:

1 A Ethical relativism

2 B Situational ethics

3 C Deontological ethics

4 D Teleological ethics

Thomas Jefferson's writing in the preamble of the Declarations of Independence is a perfect example of what theory?

1 A Rights Theory

2 B Virtue Theories

3 C Consequentialist Theories

4 D Applied Ethics

In the Cleveland Custom Cabinets case, the owner of the

company thought it was all right to manipulate the financial

statement numbers primarily because

1 A He wanted to improve earnings to increase the share price of company stock

2 B The treatment recommended by the owner for estimating overhead conformed to GAAP

3 C He was the sole owner of the company and controlled the board of directors

4 D All of these

When an employee is given a job evaluation, he has a right to expect

1 A Fair, but honest evaluations

2 B Glowing reports

3 C 360 degree evaluations from everyone in the firm

4 D Evaluations of technical, not personal skills

In the Capitalization versus Expensing case the main ethical

issue is whether Gloria Hernandez should

1 A Capitalize or expense $1 million of expenditures

2 B Report her superiors actions to the CEO

3 C Talk to the Audit Committee

4 D Become a whistle blower

The main issue in the Reneging on a Promise case is:

1 A Should the student who accepted an offer from one CPA firm back off from that promise in order to accept the offer of another firm deemed more preferable to the student

2 B Should Regas back off from the dating relationship she developed with Giles

3 C Should the CPA firm renege on its offer of employment to a student after realizing it made one offer too many to student candidates for staff positions

4 D Should Tybell quit the firm because of conflicts with his superiors

Aristotle defined as a trait of character manifested in habitual action

1 A Virtue

2 B Ethics

3 C Morals

4 D None of these

Kelly is the controller of a small company One day the CFO

comes in and tells her to lower the estimate of uncollectible

accounts receivable Kelly insists her numbers are correct as is The CFO tells her it will mean her job at the company if she

doesn't go along with the smaller estimate The primary virtue that would enable Kelly to resist the pressure to manipulate the

number is:

1 A Loyalty

2 B Integrity

3 C Caring