Ethics

35) 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: A) Believes there is a clear violation of the law B) Contacts his/her immediate superior who says to forget about the matter C) Informs the external auditors who tell him/her to inform the appropriate authorities D) Believes there has been an ethical violation

A Difficulty: 2 Medium Topic: Application of Ethical Reasoning in Accounting Learning Objective: 01-07 Apply the IMA Statement of Ethical and Professional Practice to a case study. Bloom's: Analyze AACSB: Ethics

17) Which of the following characteristics is NOT part of behaving with empathy? A) Being loyal to one's friends B) Being understanding of one's friends C) Being sensitive to the feelings of one's friends D) Being caring about one's friends

A Difficulty: 2 Medium Topic: Modern Moral Philosophies Learning Objective: 01-04 Differentiate between moral philosophies and their effect on ethical reasoning in accounting. Bloom's: Evaluate AACSB: Ethics

15) Assume you were assigned a term paper and decided to surf the web to identify a provider of papers for a fee. You chose what you thought was the best paper available. With respect to Rest's model of morality it can be said that: A) Your actions lack moral sensitivity B) Your actions are based on moral judgments C) You are making judgments based on expectations of your peer group D) You have made a decision based on the common good

A Difficulty: 2 Medium Topic: Rest's Four-Component Model of Ethical Decision Making Learning Objective: 02-06 Explain Rests model and how its components influence ethical decision making. Bloom's: Apply AACSB: Ethics

8) Ethical relativism can best be described as a: A) Point of view that morality is relative to the norms of one's culture. B) Concept that holds that integrity should be maintained in the face of pressure by others. C) An ethical reasoning method that holds one should always act out of self-interest. D) An ethical reasoning method that holds one should always consider the effect of one's actions on others.

A Difficulty: 2 Medium Topic: The Six Pillars of Character Learning Objective: 01-03 Describe how the pillars of character support ethical decision making. Bloom's: Understand AACSB: Ethics

63) When an employee is given a job evaluation, he has a right to expect: A) Fair evaluations B) Caring and empathy on the part of the evaluator C) 360 degree evaluations from everyone in the firm D) Evaluations of technical, not personal skills

A Difficulty: 2 Medium Topic: What Is Ethics? Learning Objective: 01-02 Discuss the relationship between one's values and ethics; and legal obligations. Bloom's: Analyze AACSB: Ethics

69) The cultural value of Individualism reflects: A) The degree a society reinforces individual or collective achievement B) Tolerance for uncertainty and ambiguity in society C) The degree of equality between people in a society D) Whether a society has a long-term or short-term orientation

A Difficulty: 2 Medium Topic: What Is Ethics? Learning Objective: 01-02 Discuss the relationship between one's values and ethics; and legal obligations. Bloom's: Analyze AACSB: Ethics

30) Deontology deals with: A) Rights of others and duties toward them B) Consequences of actions C) Following prescribed virtue characteristics D) Following the law as an element of ethical behavior

A Difficulty: 3 Hard Topic: Modern Moral Philosophies Learning Objective: 01-04 Differentiate between moral philosophies and their effect on ethical reasoning in accounting. Bloom's: Analyze AACSB: Ethics

80) In the Better Boston Beans case, what is the ethical dilemma facing Cyndie? A) Loyalty of co-worker versus trust of co-worker B) Trust of co-worker versus the honesty of the workplace C) Honesty of the workplace versus the privacy of an individual D) Privacy of an individual versus loyalty of co-worker

B Difficulty: 1 Easy Topic: Integrity: The Basis of Accounting Learning Objective: 01-01 Explain how integrity enables a CPA to withstand pressures and avoid subordination of judgment. Bloom's: Analyze AACSB: Ethics

1) What is the common characteristic of Aristotle's virtues and ethical standards for CPAs? A) Truthfulness B) Integrity C) Loyalty D) Due care

B Difficulty: 1 Easy Topic: Integrity: The Basis of Accounting Learning Objective: 01-01 Explain how integrity enables a CPA to withstand pressures and avoid subordination of judgment. Bloom's: Apply AACSB: Ethics

2) In reference to Rest's four-component Model of Morality, which component reflects an individual's willingness to place ethical values ahead of non-ethical values that relate to self-interest? A) Moral Character B) Moral Motivation C) Moral Sympathy D) Moral Judgment

B Difficulty: 1 Easy Topic: Rest's Four-Component Model of Ethical Decision Making Learning Objective: 02-06 Explain Rests model and how its components influence ethical decision making. Bloom's: Apply AACSB: Ethics

36) Eddie paid an $8 restaurant check with a $10 bill. The waitress gave him $12 back. The most ethical action for Eddie is to: A) Keep the extra $10 B) Inform the waitress of her overpayment C) Inform the manager of the restaurant of the overpayment D) Leave a larger tip for the waitress

B Difficulty: 1 Easy Topic: What Is Ethics? Learning Objective: 01-02 Discuss the relationship between one's values and ethics; and legal obligations. Bloom's: Analyze AACSB: Ethics

20) Objectivity requires that a CPA should: A) Maintain a mental attitude of intellectual honesty and independence B) Maintain a mental attitude of intellectual honesty and impartiality C) Act in accordance with the best interests of one's client D) Act in accordance with the best interests of one's employer

B Difficulty: 2 Medium Topic: AICPA Code of Conduct Learning Objective: 01-06 Discuss the Principles section of the AICPA Code of Professional Conduct. Bloom's: Analyze AACSB: Ethics

67) Which of the following is true of the relationship between civility and ethics? A) One can be both ethical and uncivil. B) One can be both civil and unethical. C) One can use others, be a bully and be ethical. D) One can have empathy and caring for others and be uncivil towards them.

B Difficulty: 2 Medium Topic: The Six Pillars of Character Learning Objective: 01-03 Describe how the pillars of character support ethical decision making. Bloom's: Analyze AACSB: Ethics

39) 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: A) Ignore the situation because Janice doesn't know why the manager pocketed the money B) Inform her immediate supervisor of what she observed C) Tell another staff accountant who is a friend and ask for her advice D) Tell the superior of the accounting manager what she has observed

B Difficulty: 2 Medium Topic: What Is Ethics? Learning Objective: 01-02 Discuss the relationship between one's values and ethics; and legal obligations. Bloom's: Analyze AACSB: Ethics

73) In the Moral Turpitude case, the primary ethical issue in the case is: A) Falsification of financial statements B) Violation of the acts discreditable C) The lack of independence of the audit team D) An inappropriate relationship between a supervisor and subordinate

B Difficulty: 2 Medium Topic: What Is Ethics? Learning Objective: 01-02 Discuss the relationship between one's values and ethics; and legal obligations. Bloom's: Analyze AACSB: Ethics

3) Which of the following situations would be considered ethical? A) The cashier at Wal-Mart gives you $5 more than you were supposed to receive and you don't do anything about it B) You accidentally back into a car at Wal-Mart and leave your information for them to call C) Receiving fake $20 bills and using them in a store while knowing they are fake D) Finding a phone in a restaurant and keeping it

B Difficulty: 2 Medium Topic: What Is Ethics? Learning Objective: 01-02 Discuss the relationship between one's values and ethics; and legal obligations. Bloom's: Evaluate AACSB: Ethics

79) In the Cleveland Custom Cabinets case, the owner of the company thought it was all right to manipulate the financial statement numbers primarily because: A) He wanted to improve earnings to increase the share price of company stock B) The treatment recommended by the owner for estimating overhead conformed to GAAP C) He was the sole owner of the company and controlled the board of directors D) He got approval from the auditors

C Difficulty: 1 Easy Topic: Integrity: The Basis of Accounting Learning Objective: 01-01 Explain how integrity enables a CPA to withstand pressures and avoid subordination of judgment. Bloom's: Analyze AACSB: Ethics

7) Which of the following elements does NOT make up an integral part of what is meant by "ethics"? A) Accepted standards of behavior B) Knowing the difference between right and wrong C) Always following the law D) The moral point of view

C Difficulty: 1 Easy Topic: Integrity: The Basis of Accounting Learning Objective: 01-01 Explain how integrity enables a CPA to withstand pressures and avoid subordination of judgment. Bloom's: Apply AACSB: Ethics

43) Ty is a rising star at Texas State Country & Western Stores. He is the controller of the company. His wife, Rosie, is the lead auditor of the CPA firm that examines Country & Western's financial statements and issues an audit opinion. Given the nature of the relationships, Rosie would violate what ethical standard if she is allowed to conduct the audit: A) Integrity B) Due care C) Independence D) Responsibility

C Difficulty: 2 Medium Topic: AICPA Code of Conduct Learning Objective: 01-06 Discuss the Principles section of the AICPA Code of Professional Conduct. Bloom's: Analyze AACSB: Ethics

21) The Independence Principle in the AICPA Code applies to: A) All accountants and auditors B) All CPAs regardless of professional services C) All CPAs who render attestation services D) All members of the audit committee

C Difficulty: 2 Medium Topic: AICPA Code of Conduct Learning Objective: 01-06 Discuss the Principles section of the AICPA Code of Professional Conduct. Bloom's: Apply AACSB: Ethics

49) Internal rewards of accounting practice include: A) Wealth and prestige B) Success and power C) Integrity and Excellence D) Achievement and notoriety

C Difficulty: 2 Medium Topic: AICPA Code of Conduct; The Public Interest in Accounting Learning Objective: 01-06 Discuss the Principles section of the AICPA Code of Professional Conduct.; 01-05 Describe the regulatory system in accounting and how professional accountants serve the public interest. Bloom's: Analyze AACSB: Ethics

13) The results of studies indicate that CPAs reason primarily at: A) Stages 1 and 2 B) Stages 2 and 3 C) Stages 3 and 4 D) Stages 4 and 5

C Difficulty: 2 Medium Topic: Kohlberg and the Cognitive Development Approach Learning Objective: 02-01 Analyze the thought process involved in making decisions and taking ethical action. Bloom's: Apply AACSB: Ethics

10) Individuals who reason at stage 6 incorporate ethical reasoning based on: A) The morality of law and duty to the social order B) A rational calculation of benefits and harms to society C) Universal ethical principles D) All of the above

C Difficulty: 2 Medium Topic: Kohlberg and the Cognitive Development Approach Learning Objective: 02-04 Describe Kohlbergs stages of moral development. Bloom's: Apply AACSB: Ethics

11) A client asks his accountant to ignore a mistake which overstated the accounts receivable account. The accountant decides that the accounts receivable account has to be corrected to state the correct amount based on the current accounting rules. Which stage of Kohlberg' Stages of Moral Development is the accounting reasoning? A) Stage 2 B) Stage 3 C) Stage 4 D) Stage 5

C Difficulty: 2 Medium Topic: Kohlberg and the Cognitive Development Approach Learning Objective: 02-04 Describe Kohlbergs stages of moral development. Bloom's: Apply AACSB: Ethics

16) Yvonne is preparing a tax return for Jack. Jack wants to claim his nephew as a dependent even though he does not meet the criteria. Jack says if Yvonne does not list his nephew as a dependent, he will fire her and find a new tax accountant. Yvonne refuses because it is illegal to claim a dependent that does not meet the qualifications. Based on Yvonne's decision, she is likely reasoning at which stage of Kohlberg's moral development model? A) Stage 2 B) Stage 3 C) Stage 4 D) Stage 5

C Difficulty: 2 Medium Topic: Kohlberg and the Cognitive Development Approach Learning Objective: 02-04 Describe Kohlbergs stages of moral development. Bloom's: Apply AACSB: Ethics

9) In stage 5 of Kohlberg's model, ethical reasoning is motivated by: A) Acting in the best interests of others B) Following the law C) Upholding the rights, values, and legal contracts of society D) Acting based on universal principles

C Difficulty: 2 Medium Topic: Kohlberg and the Cognitive Development Approach Learning Objective: 02-04 Describe Kohlbergs stages of moral development. Bloom's: Apply AACSB: Ethics

20) A criticism of the Kohlberg model is that it: A) Suggests that people continue to change their decision priorities over time. B) Considers development of moral reasoning necessary to be a moral person. C) Makes deontological ethics superior to other ethical perspectives. D) Considers all complexities of decision-making and behavior.

C Difficulty: 2 Medium Topic: Kohlberg's Stages of Moral Development Learning Objective: 02-05 Explain how cognitive processes influence ethical decision making in accounting. Bloom's: Analyze AACSB: Ethics

18) If one's reputation is tainted it may create a: A) Conflict of interest B) Loss of independence C) Lack of trust D) Loss of objectivity

C Difficulty: 2 Medium Topic: Modern Moral Philosophies Learning Objective: 01-04 Differentiate between moral philosophies and their effect on ethical reasoning in accounting. Bloom's: Analyze AACSB: Ethics

28) The ethical reasoning method that is based on treating equals, equally and unequals, unequally is: A) Enlightened egoism B) Act utilitarianism C) Justice D) Virtue

C Difficulty: 2 Medium Topic: Modern Moral Philosophies Learning Objective: 01-04 Differentiate between moral philosophies and their effect on ethical reasoning in accounting. Bloom's: Analyze AACSB: Ethics

31) The biggest problem in implementing a utilitarian approach to decision making is: A) The interests of others may be subservient to self-interests B) It fails to consider the interests of others C) It can be difficult to weigh all the consequences of actions D) It relies on moral absolutes

C Difficulty: 2 Medium Topic: Modern Moral Philosophies Learning Objective: 01-04 Differentiate between moral philosophies and their effect on ethical reasoning in accounting. Bloom's: Analyze AACSB: Ethics

47) Virtue ethics emphasizes development of good habits of character. What should be the greatest reward of practicing good habits of character, according to MacIntyre? A) External rewards B) Loyalty from others C) Internal rewards D) Authority of rules

C Difficulty: 2 Medium Topic: Modern Moral Philosophies Learning Objective: 01-04 Differentiate between moral philosophies and their effect on ethical reasoning in accounting. Bloom's: Analyze AACSB: Ethics

51) Greatest good for the greatest number of people is the theory of ________. A) Rights B) Deontology C) Utilitarianism D) Justice

C Difficulty: 2 Medium Topic: Modern Moral Philosophies Learning Objective: 01-04 Differentiate between moral philosophies and their effect on ethical reasoning in accounting. Bloom's: Analyze AACSB: Ethics

54) Bob is being pressured by his superior to go along with improper accounting and told he is expected to be a team player. Which of the following statements best characterizes those expectations? A) Independence B) Confidentiality C) Loyalty D) Utilitarianism

C Difficulty: 2 Medium Topic: Modern Moral Philosophies Learning Objective: 01-04 Differentiate between moral philosophies and their effect on ethical reasoning in accounting. Bloom's: Analyze AACSB: Ethics

55) When making a donation at the local Goodwill, Martha tells the clerk that her old computer is in perfect working order when she knows it is not, just so she can deduct more on her taxes. Which theory best describes Martha's behavior? A) Utilitarianism B) Deontology C) Egoism D) Justice

C Difficulty: 2 Medium Topic: Modern Moral Philosophies Learning Objective: 01-04 Differentiate between moral philosophies and their effect on ethical reasoning in accounting. Bloom's: Analyze AACSB: Ethics

57) Decisions that are made based on the underlying cultural factors can be best characterized by: A) Ethical Collectivism B) Situational ethics C) Ethical relativism D) Judgmental Individualism

C Difficulty: 2 Medium Topic: Modern Moral Philosophies Learning Objective: 01-04 Differentiate between moral philosophies and their effect on ethical reasoning in accounting. Bloom's: Analyze AACSB: Ethics

58) When applying Utilitarianism to judge actions, what is the only thing that matters? A) Motives B) Fairness C) Consequences D) Rights

C Difficulty: 2 Medium Topic: Modern Moral Philosophies Learning Objective: 01-04 Differentiate between moral philosophies and their effect on ethical reasoning in accounting. Bloom's: Analyze AACSB: Ethics

60) Your manager asks you to "cook the books" to support a loan application at the local bank. The manager insists it is a one-time request. What should you do? A) Go along with the manager's request B) Talk to others in the company to determine how they handled such situations C) Refuse to go along with the request D) Inform the audit committee

C Difficulty: 2 Medium Topic: Modern Moral Philosophies Learning Objective: 01-04 Differentiate between moral philosophies and their effect on ethical reasoning in accounting. Bloom's: Analyze AACSB: Ethics

23) Aristotle believed that ________ always preceded the choice of action. A) Empathy B) Due Care C) Deliberation D) Loyalty

C Difficulty: 2 Medium Topic: Modern Moral Philosophies; What Is Ethics? Learning Objective: 01-04 Differentiate between moral philosophies and their effect on ethical reasoning in accounting.; 01-02 Discuss the relationship between one's values and ethics; and legal obligations. Bloom's: Evaluate AACSB: Ethics

32) The biggest problem in implementing a rights approach to decision making is: A) The interests of others may be subservient to self-interests B) It is difficult to weigh harms and benefits C) It relies on moral absolutes D) It can be difficult to determine criteria to distinguish equals from unequal claims

C Difficulty: 2 Medium Topic: Moral Philosophies and Their Effect on Ethical Reasoning Learning Objective: 01-04 Differentiate between moral philosophies and their effect on ethical reasoning in accounting. Bloom's: Analyze AACSB: Ethics

46) What is the one virtue that people should want in a boss, to trust a boss? A) Diligence B) Commitment C) Honesty D) Sense of humor

C Difficulty: 2 Medium Topic: The Six Pillars of Character Learning Objective: 01-03 Describe how the pillars of character support ethical decision making. Bloom's: Analyze AACSB: Ethics

48) Michael Josephson, founder of the Josephson Institute of Ethics, is credited for developing: A) Book of virtues B) Care and response orientation C) Six Pillars of Character D) Rights theory

C Difficulty: 2 Medium Topic: The Six Pillars of Character Learning Objective: 01-03 Describe how the pillars of character support ethical decision making. Bloom's: Analyze AACSB: Ethics

61) A difficult choice between two moral principles that are in conflict with one another is known as a/an: A) ethical relativism B) situational ethics C) ethical dilemma D) conflict ethics

C Difficulty: 2 Medium Topic: What Is Ethics? Learning Objective: 01-02 Discuss the relationship between one's values and ethics; and legal obligations. Bloom's: Analyze AACSB: Ethics

65) Hofstede's Cultural Dimensions helps explain how workers from different cultures might react in the workplace. The Long-Term Orientation dimension could help explain the different approaches toward: A) Dealing with uncertainty B) Dealing with differences in power structure C) Emphasizing short-term and long-term results D) Emphasizing results over process

C Difficulty: 2 Medium Topic: What Is Ethics? Learning Objective: 01-02 Discuss the relationship between one's values and ethics; and legal obligations. Bloom's: Analyze AACSB: Ethics

72) In the Giles and Regas case, the primary ethical issue can be stated as: A) Whether a subordinate should blow the whistle on a superior who has violated ethical policy B) Whether two staff members of the same rank should be allowed to date C) Whether a superior should become involved in a dating relationship with a subordinate D) Whether a student should renege on the acceptance of an offer from one firm after receiving an offer from a second firm

C Difficulty: 2 Medium Topic: What Is Ethics? Learning Objective: 01-02 Discuss the relationship between one's values and ethics; and legal obligations. Bloom's: Analyze AACSB: Ethics

10) Which of the following is NOT an element of trustworthiness according to the Six Pillars of Character? A) Reliability B) Loyalty C) Fairness D) Honesty

C Difficulty: 2 Medium Topic: What Is Ethics? Learning Objective: 01-02 Discuss the relationship between one's values and ethics; and legal obligations. Bloom's: Understand AACSB: Ethics

34) The credibility standard in the Statement of Ethical Professional Practice of the IMA requires that an accounting professional should: A) Communicate information fairly and objectively B) Disclose all relevant information that might affect the intended user's understanding of the reports, analyses or recommendations C) Disclose delays or deficiencies in information, timeliness, processing or internal controls in conformance with organization policy and the law D) All of the above

D Difficulty: 2 Medium Topic: Application of Ethical Reasoning in Accounting Learning Objective: 01-07 Apply the IMA Statement of Ethical and Professional Practice to a case study. Bloom's: Apply AACSB: Ethics

5) Which of the following characteristics does NOT describe the behavior of Cynthia Cooper in the WorldCom fraud? A) Persistence B) Competence C) Integrity D) Conformity

D Difficulty: 2 Medium Topic: Integrity: The Basis of Accounting; AICPA Code of Conduct Learning Objective: 01-01 Explain how integrity enables a CPA to withstand pressures and avoid subordination of judgment.; 01-06 Discuss the Principles section of the AICPA Code of Professional Conduct. Bloom's: Analyze AACSB: Ethics

5) In the "Heinz and the Drug" case described in the chapter, if Heinz was reasoning at stage 5 he might decide to steal the drug based on which of the following reasoning? A) Heinz should steal the medicine, because he will be much happier if he saves his wife, even if he will have to serve a prison sentence. B) Heinz should steal the medicine, because his wife expects it. C) Heinz should steal the medicine, because the law prohibits exceptions. D) Heinz should steal the medicine, because everyone has a right to live, regardless of the law.

D Difficulty: 2 Medium Topic: Kohlberg and the Cognitive Development Approach Learning Objective: 02-04 Describe Kohlbergs stages of moral development. Bloom's: Apply AACSB: Ethics

6) Which of the following might NOT describe Heinz's thought process in deciding whether to steal the drug if he were at stage 6? A) Heinz should steal the medicine, because everyone has a right to live, regardless of the law. B) Heinz should steal the medicine, because saving a human life is a more fundamental value than the property rights of another person. C) Heinz should not steal the medicine, because that violates the golden rule of honesty and respect. D) Heinz should not steal the medicine, because the scientist has a right to fair compensation.

D Difficulty: 2 Medium Topic: Kohlberg and the Cognitive Development Approach Learning Objective: 02-04 Describe Kohlbergs stages of moral development. Bloom's: Apply AACSB: Ethics

16) Treating others fairly encompasses treating them: A) Equally, impartially, and responsibly B) Equally, responsibly, and openly C) Impartially, openly, and diligently D) Equally, impartially, and openly

D Difficulty: 2 Medium Topic: Modern Moral Philosophies Learning Objective: 01-04 Differentiate between moral philosophies and their effect on ethical reasoning in accounting. Bloom's: Analyze AACSB: Ethics

33) The biggest problem in applying virtue theory to decision making is: A) It can be difficult to identify virtues B) It relies on moral absolutes in decision making C) It can be difficult to determine virtues to distinguish equals from unequal claims in decision making D) Conflicts between virtues may make decision making more difficult

D Difficulty: 2 Medium Topic: Modern Moral Philosophies Learning Objective: 01-04 Differentiate between moral philosophies and their effect on ethical reasoning in accounting. Bloom's: Analyze AACSB: Ethics

17) James Rest's model of ethical action involves four components inherent to the ethical decision-making process. Which of the following relates to a person's moral judgment of what ought to be done? A) Interpreting a situation as a moral dilemma B) Willingness to place ethical values ahead of non-ethical values C) Intention to act ethically aligning to his values D) Outcome of one's prescriptive reasoning

D Difficulty: 2 Medium Topic: Rest's Four-Component Model of Ethical Decision Making Learning Objective: 02-06 Explain Rests model and how its components influence ethical decision making. Bloom's: Apply AACSB: Ethics

44) The most important duty of public accounting is to the: A) Securities Exchange Commission B) Current stockholders C) Management D) Investing public

D Difficulty: 2 Medium Topic: The Public Interest in Accounting Learning Objective: 01-05 Describe the regulatory system in accounting and how professional accountants serve the public interest. Bloom's: Analyze AACSB: Ethics

66) Civility requires all but the following: A) Restraint B) Politeness C) Respect D) Disregard

D Difficulty: 2 Medium Topic: The Six Pillars of Character Learning Objective: 01-03 Describe how the pillars of character support ethical decision making. Bloom's: Analyze AACSB: Ethics

14) Respect is an important character of behavior because: A) It entails a loyalty obligation to one's superior B) It enables one to perform professional services competently C) It is critical to maintaining one's integrity D) It encompasses attributes of how we should treat others

D Difficulty: 2 Medium Topic: The Six Pillars of Character Learning Objective: 01-03 Describe how the pillars of character support ethical decision making. Bloom's: Apply AACSB: Ethics

15) Responsibility goes hand in hand with: A) Respect B) Loyalty C) Courage D) Accountability

D Difficulty: 2 Medium Topic: The Six Pillars of Character Learning Objective: 01-03 Describe how the pillars of character support ethical decision making. Bloom's: Apply AACSB: Ethics

9) Which of the following is NOT a pillar of character according to the Josephson Institute? A) Caring B) Citizenship C) Respect D) Judgmental

D Difficulty: 2 Medium Topic: The Six Pillars of Character Learning Objective: 01-03 Describe how the pillars of character support ethical decision making. Bloom's: Understand AACSB: Ethics

62) The relationship between legal and ethical can best be expressed as: A) Always follow the law regardless of consequences for others B) Ethical behavior requires less than legal behavior C) Legal and ethical are the same thing D) Ethical behavior requires us to do more than required by the law and less than the law allows

D Difficulty: 2 Medium Topic: What Is Ethics? Learning Objective: 01-02 Discuss the relationship between one's values and ethics; and legal obligations. Bloom's: Analyze AACSB: Ethics

68) Which of the following is NOT a likely rationalization a student might use to justify cheating on an exam? A) Ethical relativism B) Situational ethics C) Cultural conditioning D) Fair treatment

D Difficulty: 2 Medium Topic: What Is Ethics? Learning Objective: 01-02 Discuss the relationship between one's values and ethics; and legal obligations. Bloom's: Analyze AACSB: Ethics

70) The basic and fundamental beliefs that guide or motivate attitudes or actions are called: A) Relativism B) Egoism C) Morals D) Values

D Difficulty: 2 Medium Topic: What Is Ethics? Learning Objective: 01-02 Discuss the relationship between one's values and ethics; and legal obligations. Bloom's: Analyze AACSB: Ethics

71) In the Harvard Cheating scandal case, using ethical reasoning who is at fault for the situation? A) The professor B) Teaching assistants C) Students who cheated D) All of the above

D Difficulty: 2 Medium Topic: What Is Ethics? Learning Objective: 01-02 Discuss the relationship between one's values and ethics; and legal obligations. Bloom's: Analyze AACSB: Ethics

12) Social networking is the norm for many workers, and some workers spend at least 30 percent of their workday linked up to one or more networks. The Ethics Resource Center conducted a survey in which social networkers admitted each of the following except: A) They think about risks before posting online. B) They comment on their personal sites about their company if it was in the news. C) They often comment on their personal sites about managers, coworkers, and even clients. D) They always consider the consequences of their postings on others.

D Difficulty: 2 Medium Topic: What Is Ethics? Learning Objective: 01-02 Discuss the relationship between one's values and ethics; and legal obligations. Bloom's: Evaluate AACSB: Ethics

64) A danger of situational ethics is that it can be used to rationalize a wrong-doing. Such rationalizations may be seen in all of the following examples except: A) Cheating at the University of North Carolina B) Hiding Anne Frank's family to escape Nazi terror. C) Betty Vinson's actions at World Com D) David Walker's actions at the Government Accountability Office

D Difficulty: 3 Hard Topic: What Is Ethics? Learning Objective: 01-02 Discuss the relationship between one's values and ethics; and legal obligations. Bloom's: Analyze AACSB: Ethics

19) The Public Interest Principle in the AICPA Code of Professional Conduct recognizes: A) The importance of integrity in decision making B) The importance of loyalty to one's superior C) The importance of whistleblowing when financial wrongdoing exists D) The importance of maintaining confidentiality

A Difficulty: 2 Medium Topic: AICPA Code of Conduct Learning Objective: 01-06 Discuss the Principles section of the AICPA Code of Professional Conduct. Bloom's: Evaluate AACSB: Ethics

6) The ancient Greeks thought of the virtues as characteristics of behavior that: A) Could lead to a good life B) Make up the "six pillars of character" C) Support the rights theory D) Rationalize unethical actions

A Difficulty: 2 Medium Topic: Modern Moral Philosophies Learning Objective: 01-04 Differentiate between moral philosophies and their effect on ethical reasoning in accounting. Bloom's: Apply AACSB: Ethics

22) A CPA would violate the Due Care Principle if he/she: A) Undertook a professional engagement without having the requisite background, knowledge and experience. B) Specializes in the industry of the client, even offering training classes for other accounting firms on the industry. C) The accounting firm uses two external partner reviews on high risk audits or clients. D) Performs tax services for an audit client with audit committee approval.

A Difficulty: 2 Medium Topic: AICPA Code of Conduct Learning Objective: 01-06 Discuss the Principles section of the AICPA Code of Professional Conduct. Bloom's: Analyze AACSB: Ethics

76) In the Capitalization versus Expensing case the main ethical issue is whether Gloria Hernandez should: A) Capitalize or expense $1 million of expenditures B) Report her superiors' actions to the CEO C) Talk to the audit committee about the pressure imposed by her supervisor D) Become a whistle blower

A Difficulty: 1 Easy Topic: Integrity: The Basis of Accounting Learning Objective: 01-01 Explain how integrity enables a CPA to withstand pressures and avoid subordination of judgment. Bloom's: Analyze AACSB: Ethics

78) In the Shifty Industries case, the primary ethical issue can be stated as: A) Whether an accountant should claim a higher section 179 deduction than allowed by law. B) Whether an accountant should claim lack of diligence of other staff accountants. C) Whether an accountant should claim inflated expenses on the company tax return. D) Whether an accountant should claim lack of competence by other staff accountants.

A Difficulty: 1 Easy Topic: Integrity: The Basis of Accounting Learning Objective: 01-01 Explain how integrity enables a CPA to withstand pressures and avoid subordination of judgment. Bloom's: Analyze AACSB: Ethics

37) 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? A) Allow Sally to use the dictionary since she is at a disadvantage B) Not allow Sally to use the dictionary because she should know enough English to get by C) Allow the other students to bring in some tool to give them an advantage D) None of the above

A Difficulty: 1 Easy Topic: Modern Moral Philosophies Learning Objective: 01-04 Differentiate between moral philosophies and their effect on ethical reasoning in accounting. Bloom's: Analyze AACSB: Ethics

75) The main issue in the Unintended Consequences case is: 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 B) Should Regas back off from the dating relationship she developed with Giles 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 D) Should Tybell quit the firm because of conflicts with his superiors

A Difficulty: 1 Easy Topic: The Six Pillars of Character Learning Objective: 01-03 Describe how the pillars of character support ethical decision making. Bloom's: Analyze AACSB: Ethics

42) Steve is deep in debt due to a gambling problem. He is the bookkeeper for a family-owned business, Cal Poly Greenery. The company has only three employees - Steve, the husband, and the wife. All three have been friends for many years. One day the loan shark who lent Steve $20,000 comes knocking at his door asking for repayment of the loan. Steve convinces the loan shark to give him another day. The following day Steve writes a check on the company's books to himself for $20,000. Since he reconciles the bank accounts and prepares the financial statements, Steve knows it's unlikely the owners will ever know about what he has done. From an ethical perspective, Steve has: A) Violated the trust placed in him by the owners B) Risked his reputation if the loan shark finds out C) Risked his ability to continue working for Cal Poly Greenery D) All of the above

A Difficulty: 2 Medium Topic: Integrity: The Basis of Accounting Learning Objective: 01-01 Explain how integrity enables a CPA to withstand pressures and avoid subordination of judgment. Bloom's: Analyze AACSB: Ethics

13) Which of following is false of active social networkers? A) They do not discuss company information online. B) They witness more misconduct among their coworkers. C) They experience more retaliation when they report their colleagues. D) They think about risks before posting online.

A Difficulty: 2 Medium Topic: Integrity: The Basis of Accounting Learning Objective: 01-01 Explain how integrity enables a CPA to withstand pressures and avoid subordination of judgment. Bloom's: Apply AACSB: Ethics

12) The ethical domain in accounting and auditing refers to: A) The important constituent groups affected by accounting and auditing work B) The stages of the moral development of accountants and auditors C) The decision making process followed by accountants and auditors D) The rules of conduct in the AICPA Code of Professional Conduct

A Difficulty: 2 Medium Topic: Kohlberg and the Cognitive Development Approach Learning Objective: 02-04 Describe Kohlbergs stages of moral development. Bloom's: Apply AACSB: Ethics

4) Kohlberg's model can best be described as: A) The various phases in one's moral development and related levels of moral reasoning B) A model of ethical action that is based on the belief that one will not report incidents of wrongdoing if they believe others will report it C) A predictive tool to determine how a person will reason ethically based on one's views on diversity D) A model of age-specific levels of moral reasoning

A Difficulty: 2 Medium Topic: Kohlberg and the Cognitive Development Approach Learning Objective: 02-04 Describe Kohlbergs stages of moral development. Bloom's: Apply AACSB: Ethics

7) In stage 1 of Kohlberg's model, ethical reasoning is motivated by: A) Fear of punishment B) Satisfaction of one's needs C) Following the law D) Acting based on universal ethical principles

A Difficulty: 2 Medium Topic: Kohlberg and the Cognitive Development Approach Learning Objective: 02-04 Describe Kohlbergs stages of moral development. Bloom's: Apply AACSB: Ethics

3) The cognitive development approach refers to: A) The thought process followed in one's moral development B) The method of moral reasoning used in decision making C) The exercise of professional judgment in decision making D) The approach to giving voice to one's values

A Difficulty: 2 Medium Topic: Kohlberg's Stages of Moral Development Learning Objective: 02-04 Describe Kohlbergs stages of moral development. Bloom's: Apply AACSB: Ethics

25) The method of ethical reasoning that evaluates actions in terms of harms and benefits is: A) Act Utilitarianism B) Rights Theory C) Justice D) Virtue

A Difficulty: 2 Medium Topic: Modern Moral Philosophies Learning Objective: 01-04 Differentiate between moral philosophies and their effect on ethical reasoning in accounting. Bloom's: Analyze AACSB: Ethics

27) Which of the following elements is not an integral part of Rights Theory? A) Act based on the consequences of one's actions on others B) Treat people as an end and not merely as a means to an end C) Act in a way you would want others to act in similar situations D) Act in a way that is universally accepted

A Difficulty: 2 Medium Topic: Modern Moral Philosophies Learning Objective: 01-04 Differentiate between moral philosophies and their effect on ethical reasoning in accounting. Bloom's: Analyze AACSB: Ethics

29) Teleology deals with: A) Consequences of actions B) Fairness to others C) Respecting the rights of others D) Following prescribed virtue characteristics

A Difficulty: 2 Medium Topic: Modern Moral Philosophies Learning Objective: 01-04 Differentiate between moral philosophies and their effect on ethical reasoning in accounting. Bloom's: Analyze AACSB: Ethics

45) The best restatement of Kant's categorical imperative is: A) Do to others as you would have everyone do unto you B) Consider others needs before you act C) That those with a smaller stake should have a smaller say compared to those with a bigger stake D) That the ends justifies the means

A Difficulty: 2 Medium Topic: Modern Moral Philosophies Learning Objective: 01-04 Differentiate between moral philosophies and their effect on ethical reasoning in accounting. Bloom's: Analyze AACSB: Ethics

50) Utilitarian philosophers are divided into two types: act utilitarian and A) rule utilitarian. B) egoistic utilitarian. C) ethical utilitarian. D) beneficial utilitarian.

A Difficulty: 2 Medium Topic: Modern Moral Philosophies Learning Objective: 01-04 Differentiate between moral philosophies and their effect on ethical reasoning in accounting. Bloom's: Analyze AACSB: Ethics

53) Virtue ethics is: A) Doing what is right B) One's duty to act in a socially acceptable manner C) One's ability to meet or exceed their potential D) What one ought to do when presented with an ethical dilemma

A Difficulty: 2 Medium Topic: Modern Moral Philosophies Learning Objective: 01-04 Differentiate between moral philosophies and their effect on ethical reasoning in accounting. Bloom's: Analyze AACSB: Ethics

2) 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? A) Egoism B) Justice C) Virtue ethics D) Utilitarianism

A Difficulty: 2 Medium Topic: Modern Moral Philosophies Learning Objective: 01-04 Differentiate between moral philosophies and their effect on ethical reasoning in accounting. Bloom's: Apply AACSB: Ethics

41) Jason is the fastest worker on the audit of a company for the firm Zits LLP. Other Zits workers take twice as long to complete the equivalent amount of work as Jason. One day Jason is approached by the other workers and is asked to slow down "You are exceeding the time budget for the audit and making the rest of us look bad," said one staff member. From an organizational, ethical point of view, the best thing for Jason to do is: A) Tell the other staff members that he will use the time he saves on his budget to help them to meet their budget by picking up their slack B) Approach the supervisor to discuss the pressure of fellow staff to slow down on doing audit work C) Explain to the other staff members that he works diligently and they should do the same D) Tell the other staff members to mind their own business

B Difficulty: 2 Medium Topic: Integrity: The Basis of Accounting Learning Objective: 01-01 Explain how integrity enables a CPA to withstand pressures and avoid subordination of judgment. Bloom's: Analyze AACSB: Ethics

11) An accountant who blows the whistle on financial wrongdoing by his/her employer by going outside the entity violates: A) The due care principle B) Confidentiality C) One's reliability obligation D) Public interest obligation

B Difficulty: 2 Medium Topic: Integrity: The Basis of Accounting Learning Objective: 01-01 Explain how integrity enables a CPA to withstand pressures and avoid subordination of judgment. Bloom's: Apply AACSB: Ethics

4) Which of the following characteristics does NOT describe the importance of integrity in decision making? A) Acting out of moral principle B) Being loyal to one's superior C) Having the courage to do the right thing D) Not subordinating professional judgment to others

B Difficulty: 2 Medium Topic: Integrity: The Basis of Accounting Learning Objective: 01-01 Explain how integrity enables a CPA to withstand pressures and avoid subordination of judgment. Bloom's: Apply AACSB: Ethics

8) In stage 3 of Kohlberg's model, ethical reasoning is motivated by: A) Satisfaction of one's needs B) Acting in the best interests of others C) Upholding the rights, values, and legal contracts of society D) Acting based on universal principles

B Difficulty: 2 Medium Topic: Kohlberg and the Cognitive Development Approach Learning Objective: 02-04 Describe Kohlbergs stages of moral development. Bloom's: Apply AACSB: Ethics

24) The method of ethical reasoning that deals with making decisions after considering the interests of others is: A) Egoism B) Enlightened Egoism C) Utilitarianism D) Rights Theory

B Difficulty: 2 Medium Topic: Modern Moral Philosophies Learning Objective: 01-04 Differentiate between moral philosophies and their effect on ethical reasoning in accounting. Bloom's: Analyze AACSB: Ethics

26) The method of ethical reasoning that requires selecting the correct moral rule that produces the greatest benefits over harms is: A) Act Utilitarianism B) Rule Utilitarianism C) Rights Theory D) Justice

B Difficulty: 2 Medium Topic: Modern Moral Philosophies Learning Objective: 01-04 Differentiate between moral philosophies and their effect on ethical reasoning in accounting. Bloom's: Analyze AACSB: Ethics

38) 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: A) Accuse the alleged cheater of cheating in front of all the other players B) Consider what might happen if he accuses the player of cheating and he is wrong C) Speak to the alleged cheater during a regularly scheduled break and tell him not to do it again D) Forget about the whole matter

B Difficulty: 2 Medium Topic: Modern Moral Philosophies Learning Objective: 01-04 Differentiate between moral philosophies and their effect on ethical reasoning in accounting. Bloom's: Analyze AACSB: Ethics

52) The motive of "duty" is most associated with ________. A) Egoism B) Deontology C) Utilitarianism D) Justice

B Difficulty: 2 Medium Topic: Modern Moral Philosophies Learning Objective: 01-04 Differentiate between moral philosophies and their effect on ethical reasoning in accounting. Bloom's: Analyze AACSB: Ethics

56) Decisions that are made based on the underlying circumstances of a particular matter can be best characterized by: A) Ethical Collectivism B) Situational ethics C) Ethical relativism D) Judgmental Individualism

B Difficulty: 2 Medium Topic: Modern Moral Philosophies Learning Objective: 01-04 Differentiate between moral philosophies and their effect on ethical reasoning in accounting. Bloom's: Analyze AACSB: Ethics

59) Assume you are taking an exam and you clearly see that your friend is cheating. Your professor does not notice it. What is the most appropriate action for you to take if you are an ethical person? A) You pretend not to notice it. B) You discuss the matter with your friend after the exam. C) You also cheat the exam because your friend does. D) Send a text message to your friend and tell them to stop cheating.

B Difficulty: 2 Medium Topic: Modern Moral Philosophies Learning Objective: 01-04 Differentiate between moral philosophies and their effect on ethical reasoning in accounting. Bloom's: Analyze AACSB: Ethics

14) Rest's "Four Component Model of Morality" can best be described as: A) A model of moral development based on one's diversity perspective B) A model of the relationship between ethical action and one's level of moral development C) A model of moral judgment based on one's possession of certain virtues of behavior D) An approach to ethical decision making based on prescribed steps in making ethical decisions

B Difficulty: 2 Medium Topic: Rest's Four-Component Model of Ethical Decision Making Learning Objective: 02-06 Explain Rests model and how its components influence ethical decision making. Bloom's: Apply AACSB: Ethics

40) 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: A) Loyalty B) Integrity C) Caring D) Objectivity

B Difficulty: 2 Medium Topic: The Six Pillars of Character Learning Objective: 01-03 Describe how the pillars of character support ethical decision making. Bloom's: Analyze AACSB: Ethics

19) In Thorne's model of ethical decision making, the instrumental virtues relate to: A) Moral sensitivity B) Ethical reasoning C) Ethical motivation D) Ethical character

D Difficulty: 2 Medium Topic: Aligning Ethical Behavior and Ethical Intent: Virtue-Based Decision Making Learning Objective: 02-04 Describe Kohlbergs stages of moral development. Bloom's: Apply AACSB: Ethics

77) Kevin Lowe's ethical dilemma in the Eating Time case can best be described as whether to: A) Date another staff member of the CPA firm B) Inform his supervisor about a lack of diligence of other staff accountants C) Quit his job because he can't meet the firm's expected quality of work D) Devote time on an audit and not charge it to the job

D Difficulty: 1 Easy Topic: Integrity: The Basis of Accounting Learning Objective: 01-01 Explain how integrity enables a CPA to withstand pressures and avoid subordination of judgment. Bloom's: Analyze AACSB: Ethics

1) When Sally is asked why she should share her toys with her sister, she responds by saying "Because my mom says I have to and if I don't I'll go to time-out." In which stage of moral development is Sally? A) Conventional Morality B) Nonconventional Morality C) Postconventional Morality D) Preconventional Morality

D Difficulty: 1 Easy Topic: Kohlberg and the Cognitive Development Approach Learning Objective: 02-04 Describe Kohlbergs stages of moral development. Bloom's: Apply AACSB: Ethics

74) In the Lone Star School District case, the auditors were mostly concerned about: A) The behavior of a staff member toward client personnel B) The falsification of the financial statements C) The lack of independence of the audit team D) The lack of documentation for travel and entertainment expenses

D Difficulty: 1 Easy Topic: What Is Ethics? Learning Objective: 01-02 Discuss the relationship between one's values and ethics; and legal obligations. Bloom's: Analyze AACSB: Ethics

18) Thorne's "Integrated Model of Ethical Decision Making" can best be described as: A) A depiction of a model of moral development B) A depiction of how the Principles in the AICPA Code of Professional Conduct influences decision making C) A model of the role of virtue in decision making D) A model of the role of moral development and virtue in decision making

D Difficulty: 2 Medium Topic: Aligning Ethical Behavior and Ethical Intent: Virtue-Based Decision Making Learning Objective: 02-04 Describe Kohlbergs stages of moral development. Bloom's: Apply AACSB: Ethics