Posted: October 20th, 2022

Accounting Final Exam Guide Test Bank

Chapter 1Multiple Choice Questions
___________________________________________________

Examining the interests of stakeholders is probably required
for:

A value that is almost universally respected by stakeholder
groups is:

Companies attempt to manage the risk of something happening that
will have a negative or positive impact on the company’s objectives, such as:

Credit risksLitigation riskReputation riskEthics risksAll of the above

Most large corporations do not consider these risks in a broad
and comprehensive way:

Operational risksReputational risksCredit risksMarket risksEthics risks

The following are examples of ethics risks faced by employees:

Honesty and integrityFairness and compassionIntegrity and responsibilityFairness and integrityResponsibility and honesty

Not reporting environmental issues is an example of:

Lack of transparencyLack of integrityLack of accuracyAll of the aboveNone of the above

Incomplete disclosure of the company’s revenue recognition
policy is an example of:

Lack of transparencyLack of integrityLack of accuracyAll of the aboveNone of the above

This philosophical approach requires that an ethical decision
depends upon the duty, rights, and justice involved:

ConsequentialismVirtue ethicsDuty ethicsRighteousnessDeontology

The Moral Standards Approach focuses on the following dimensions
of the impact of a proposed action:

Net benefit to society, fair to all stakeholders, whether it is
rightNet benefit to society and
whether it is legalNet benefit to society, fair to all stakeholders, whether it is
legalFair to most stakeholders and whether it is rightNet benefit to society, fair to most stakeholders, whether it is
right

Effective crisis management could represent:

An opportunity to avoid costsAn opportunity to change employee’s perspectives on riskAn opportunity to enhance the company’s reputationAll of the aboveNone of the above

Chapter 2 Multiple Choice Questions
_______________________

In order to ensure an investment-grade credit rating, Enron
began to emphasize the following three actions:Reducing accruals, increasing cash flow, and lowering debtSmoothing accruals, increasing cash flow, and lowering debtIncreasing cash flow, lowering debt, and smoothing earningsIncreasing cash flow, lowering earnings and decreasing option
expenseIncreasing cash flow, lowering debt, and decreasing option expense

At the time of Enron’s collapse, the prevailing treatment for
employee stock option expense was:

Record stock options only when and if exercised, at exercise
priceRecord all stock options when issued, at exercise priceRecord all stock options at market priceRecord stock options only when exercised at market priceRecord not exercised options at market price

Which of the following was not a conflict of interest
that Arthur Andersen’s personnel encountered?Auditing their own work as SPE consultantsLosing a very large clientA partner reviewed another partner’s workInternal debates about Enron’s questionable accounting
treatments were not discussed with the audit committeeAudit staff leaving the firm to work for Enron

Which of the following was not among Arthur Andersen’s
shortcomings in conducting Enron’s audit?Lack of competenceFailure of quality control standardsMisunderstanding of auditor’s fiduciary roleInconclusive testing of controlInsufficient information provided by Enron’s staff

In general terms, WorldCom overstated its reported net income
by:

Generating false expensesBooking false revenueCapitalizing line costsAmortizing line costs quicker than allowed under GAAPRecognizing future period’s revenue

Chapter 3 Multiple Choice Questions
_____________________________

This philosopher argued that self-interest motivates people to
form peaceful civil societies:

Adam SmithJohn LockeThomas HobbesJeremy BenthamJohn Rawls

Two weaknesses of the following approach are (1) it is difficult
to determine who demonstrates integrity in the workplace, and (2) it is difficult to choose between
compassion and not betraying somebody’s trust:DeontologyDistributive JusticeUtilitarianismMoral ImaginationVirtue Ethics

This approach presupposes that happiness, utility, pleasure,
pain and anguish can be quantified:DeontologyDistributive JusticeUtilitarianismMoral ImaginationVirtue Ethics

This philosopher argued that social and economic inequalities
are just if these inequalities are to everyone’s benefit:

Adam SmithJohn LockeThomas HobbesJeremy BenthamJohn Rawls

According to distributive justice theory, there are three main
criteria for determining the just distribution:

Need, fairness, and meritNeed, arithmetic equality, and meritOpportunity, fairness, and meritOpportunity, fairness, and arithmetic equalityNeed, arithmetic equality, and equivalence

Chapter 4 Multiple Choice Questions
______________________________

These costs can be measured indirectly by using costs incurred
in similar circumstances or mirror image alternatives:SurrogatesExternalitiesFuture impactsCollateral damagesEthical costs

This approach incorporates
the expected future impacts of a decision into the analysis:

Virtue ethicsConsequentialismCost-benefit analysisRisk-benefit analysisAll of the above

(I do not understand the
difference between Q8 and Q9; when are future impacts not expected in an
analysis? I think that Q8 should be deleted; I’ve added a replacement question
at the end.)

These values are the combinations of a value and the probability
of its occurrence:

Probable valuesCommon valuesPresent valuesExpected valuesRisk-adjusted values

Which of the following is not one of the 5 questions in
Graham Tucker’s original approach to ethical decision making?

Is it profitableIs it right?Is it fair?Is it legal?Does it demonstrate the virtues expected?

The following three standards make up the moral standards
approach:

Utilitarian, Individual rights, and JusticeUtilitarian, Individual rights, and FairnessLegal, Individual rights, and JusticeUtilitarian, Moral rights, and JusticeLegal, Moral rights, and Justice

Pastin’s approach adds the following concepts to stakeholder
impact analysis:

Rule ethicsGround rule ethicsEnd-point ethicsSocial contract ethicsAll of the above

The following approach does not specifically incorporate
a thorough review of the motivation for the decisions involved, or the virtues
or character traits expected:

5-question approachMoral standards approachPastin’s approachAll of the above(a) and (b) only

Lack of awareness of the following problem results in executives
not attributing enough value to the use of an environmental resource:

Commons problemEthics problemValue problemRisk-assessment problemMoral problem

If a decision is expected to be unfair to a particular
stakeholder group, the decision may be improved by:

Using stakeholder analysisUsing a decision making approachIncreasing the compensation to that stakeholder groupIncreasing the compensation to all stakeholder groupsAll of the above

Which of the following is not an example of a common
ethical decision-making pitfall?

Conforming to an unethical corporate cultureFocusing only on legalitiesConflicts of interestsFailure to identify all stakeholder groupsNone of the above

Failure to identify all relevant stakeholder groups for a proper
stakeholder impact analysis may be the result of:BiasConforming to an unethical corporate cultureConflicts of interestsFailure to consider the motivation for the decisionAll of the above

Completing the following steps in this order provides a sound
basis for challenging a proposed decision:

Identify facts and stakeholders, rank stakeholders and their
interests, and assess the impact of the proposed actionIdentify a proper ethical decision framework, rank stakeholders
and their interests, and assess the impact of the proposed actionRank stakeholders and their interests, identify facts and stakeholders,
and assess the impact of the proposed actionIdentify a proper ethical decision framework, identify facts and
stakeholders, and assess the impact of the proposed actionRank stakeholders and their interests, identify a proper ethical
decision framework, and assess the impact of the proposed action

Frequently, decision makers have been subject to unreasonable
expectations and unrealistic deadlines, this is an example of:

Conforming to an unethical corporate cultureFocusing only on legalitiesConflicts of interestsFailure to identify all stakeholder groupsFailure to rank stakeholder interests

Chapter 5 Multiple Choice Questions
_________________________________

Corporations are now increasingly realizing that they are
accountable:

Legally to shareholdersLegally to all stakeholdersStrategically to additional stakeholders(a) and (b)(a) and (c)

The company’s internal auditors and the Ethics Officer should
report:Day-to-day to the CEODay-to-day to the Audit Committee of the Board of DirectorsRegularly to the Audit Committee of the Board of Directors
without management being present(a) and (c)(a) and (b)Experience has revealed that, to be effective, a code must be
reinforced by:Tone at the topEthics officer and internal auditorsA comprehensive ethical culturePrinciples, rules and examplesAll of the aboveWhich of the following is not an ethics risk management
principle?Normal definitions of risk are too narrow for stakeholder
accountabilityAssign responsibility, develop follow-up processes and board
reviewDiscovery and remediation are essentialThe code of ethics must be reviewed by independent partiesAn ethics risk exists when expectations of stakeholders may not
be metA conflict of interest exists when a given decision maker (D)
and another person (P) are in the following situation:D has to exercise judgement in P’s behalfP has to exercise judgement in D’s behalfD has a special interest that interferes with proper judgement(a) and (b)(a) and (c)A potential conflict of interest exists when a given decision
maker (D) and another person (P) are in the following situation:P has a special interest that interferes with proper judgementD may have to exercise judgement in P’s behalfD has a special interest that interferes with proper judgement(a) and (b)(b) and (c)This is the preferred approach to deal with conflicts of
interestsManagementDisclosureRemediationAvoidanceAwarenessA fundamental problem examined by agency theory is how it is
possible to align:Shareholders’ and stakeholders’ goalsManager’s and stakeholders’ goalsShareholders’ and managers’ goalsPrincipal’s and shareholders’ goalsAgent’s and stakeholders’ goalsThe 20/60/20 rule states that the total percent of employees who
could commit a fraudulent act is:20%60%80%100%None of the aboveWhich of the following is not a characteristic identified by
forensic experts in prospective fraud situations?High intelligenceGreedNeed for whatever is takenOpportunity to take advantageLow probability of being caughtThe primary focus of a compliance-based ethics program is:Preventing, detecting and punishing violations of the lawDefine organizational values and encourage employee commitmentImprove image and relationship with stakeholdersProtect management from blameAll of the aboveThe primary focus of an integrity-based ethics program is:Preventing, detecting and punishing violations of the lawDefine organizational values and encourage employee commitmentImprove image and relationship with stakeholdersProtect management from blameAll of the aboveThe most important factor in encouraging employee observance to
an ethics program is that employees perceive that it is:

Compliance-based
Value-based
Achievement oriented
Stakeholder-based
Externally oriented

Building trust within an organization can have favourable impact
on employee’s willingness to share information and ideas in a process of:Ethical awarenessEthical awakeningEthical renewalEthical wave None of the aboveA Conference Board survey identified the following rationale for
developing codes of ethics:Make employees aware that adherence is critical to bottom-line
successProvide a statement of do’s and don’tsDiscuss what is expected in stakeholder relationshipsEstablish values and missionAll of the aboveThis code deals with ethics principles plus additional examples:CredoCode of ethicsCode of conductCode of practiceAll of the aboveWhich of the following is not a mechanism for monitoring
a code of ethics?Ethics audit or internal audit proceduresReviews by legal departmentAwards and bonusesAnnual sign-off by employeesEmployee surveysWhich of the following is not an example of emerging
public accountability standards or initiatives?SOX-404GRIAA-1000FTSE4GoodAll of the aboveSOX imposed the following new penalties for executives:FinesSuspensionCriminal prosecution for executivesReturn of ill-gotten gainsAll of the above

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