CPA Exam Preparation Ethics Section
Practice Questions
Course Introduction
This course focuses on the Ethics section of the CPA Exam, equipping students with an in-depth understanding of professional conduct and ethical responsibilities as prescribed by the AICPA Code of Professional Conduct and relevant state boards. Through a combination of theoretical concepts and practical scenarios, students will learn to identify, analyze, and resolve ethical dilemmas in accounting practice. Emphasis is placed on ethical reasoning, integrity, independence, and due care, preparing students to successfully demonstrate their knowledge and judgment regarding ethical issues on the CPA Exam and in their future careers as accounting professionals.
Recommended Textbook
Ethical Obligations and Decision Making in Accounting Text and Cases 4th Edition by Steven Mintz
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8 Chapters
624 Verified Questions
624 Flashcards
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Chapter 1: Ethical Reasoning: Implications for Accounting
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88 Verified Questions
88 Flashcards
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Sample Questions
Q1) 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
Answer: C
Q2) 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
Answer: A
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3
Chapter 2: Cognitive Processes and Ethical Decision
Making in Accounting
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65 Verified Questions
65 Flashcards
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Sample Questions
Q1) Which of the following connect the integrated ethical decision-making process with Rest's framework?
A)Identify the ethical and professional issues and ethical behavior
B)Identify and evaluate alternate courses of actions and ethical sensitivity
C)Reflect on the moral intensity and virtues that enable action and ethical intent
D)Take action and ethical judgment
Answer: C
Q2) In his evaluation of Kidder's model,Johnson points out that:
A)It is not easy to determine who has responsibility for solving a problem
B)A time constraint prevents making timely decisions
C)Decisions lead to action
D)We cannot apply lessons learned in one dilemma to future problems
Answer: A
Q3) 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
Answer: A
Page 4
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Chapter 3: Organizational Ethics and Corporate Governance
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86 Verified Questions
86 Flashcards
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Sample Questions
Q1) As a manager in her firm,Lucy concerns herself with the effectiveness of internal controls.Her main focus is how efficient and effective the company's internal controls are over time.Which component of internal control is Lucy engaging in?
A)Risk assessment
B)Control activities
C)Control environment
D)Monitoring
Answer: D
Q2) Research by Miceli and Near indicates that:
A)Whistleblowers hope their speaking out achieves the correction of an organization wrongdoing
B)Whistleblowers hope those who violate the rules are prosecuted
C)Whistleblowers are motivated to report under Dodd-Frank to receive an award
D)Whistleblowers always blow the whistle because of altruistic reasons
Answer: A
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Chapter 4: Ethics and Professional Judgment in Accounting
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100 Verified Questions
100 Flashcards
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Sample Questions
Q1) During the investigations by the House Subcommittee on Oversight and Investigations,a question that was raised was:
A)Why was fraud allowed to occur at some many companies?
B)Where was the board of directors in all these frauds?
C)Where were the auditors?
D)Why did the internal controls fail in so many frauds?
Q2) The main issue in the Valley View Hospital case is:
A)Fraudulent financial statements
B)Improper inventory valuation
C)Medicare fraud
D)Bribery of foreign officials
Q3) What is "Operation Broken Gate?"
A)An SEC initiative to identify audit firms that violate independence standards
B)A PCAOB initiative to identify audit firms with deficiencies in audits through its inspection program
C)An SEC initiative to identify auditors who neglect their duties and the required auditing standards
D)An AICPA program to implement its conceptual framework standards
Q4) Describe the characteristics of the KPMG Professional Judgment Framework.
Q5) Describe the basic features of the Revised AICPA Code of Professional Conduct.
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Chapter 5: Fraud in Financial Statements and Auditor
Responsibilities
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80 Verified Questions
80 Flashcards
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Sample Questions
Q1) Why is materiality one of the most difficult judgments to make in auditing financial statements?
Q2) Bill Young's ethical dilemma was:
A)Whether the loan loss reserves of the bank were understated
B)Whether to file a whistle-blower's complaint with the SEC under Dodd-Frank
C)Whether to commit fraud to cover up stealing from the company
D)Whether to inform management or the regulatory authorities of illegal acts of an audit client
Q3) Differentiate between the auditors' responsibilities to detect errors,fraud,and illegal acts.How would you assess the ethics of a company that has experienced each event with respect to motivation and the integrity of those who go along with such events?
Q4) Misstatements in the financial statements can result from:
A)Errors
B)Fraud
C)Illegal acts improperly recorded
D)All of the above
Q5) Explain the link between the opportunity to commit fraud and corporate governance systems.
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Chapter 6: Legal, Regulatory, and Professional Obligations of Auditors
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Sample Questions
Q1) The Credit Alliance v.Arthur Andersen & Co.case established three tests that must be satisfied for holding auditors liable for negligence to third parties.All of the following are tests described except:
A)Knowledge by the accountant that the financial statements are to be used for a particular purpose
B)The intention of the third party to rely on those statements
C)Some action by the accountant linking him or her to the third party that provides evidence of the accountant's understanding of intended reliance
D)The identity of the third party must be directly known to the auditor
Q2) PCAOB inspections of U.S.audit firms operating in China creates challenges because:
A)China requires the PCAOB to come to China to do their inspections
B)The SEC has to work through the China Securities Regulatory Commission to facilitate inspections of U.S.audit firms operating in China
C)China refuses to cooperate on any level with the SEC
D)The SEC requires that U.S.audit firms operating in China transmit all work papers to the U.S.audit firm's headquarters before an inspection can take place
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Chapter 7: Earnings Management
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69 Verified Questions
69 Flashcards
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Sample Questions
Q1) Accruals that are based on estimated changes in fundamental economic performance of the firm are:
A)Discretionary accruals
B)Nondiscretionary accrual
C)Operating accruals
D)Cookie jar accruals
Q2) What was the original motivation by FASB on SPEs?
A)To establish a mechanism to encourage companies to invest in needed assets while keeping related debt of its books
B)To keep the large amount of debt off the books
C)To sell non-producing assets to the SPE
D)To select which assets to sell to the SPEs affecting the gain
Q3) An unusual aspect of the Green Mountain case is it included:
A)Conference calls that provided earnings guidance to shareholders and analysts were used to mask a financial fraud
B)Desire to meet or beat analysts' earnings expectations led to manipulation of receivables balances
C)Company violated the Sarbanes-Oxley Act
D)PricewaterhouseCoopers knew about inflated inventory values
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Page 9
Chapter 8: Ethical Leadership and Decision-Making in Accounting
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55 Verified Questions
55 Flashcards
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Sample Questions
Q1) To be an ethical leader,executives must also:
A)Attend to cultivating ethics and be an ethical person
B)Attend to client's interest and be a moral person
C)Serve in followership roles
D)Serve as servant leaders
Q2) Leadership in accounting is different than leadership in most other organizations because:
A)Accountants are regulated by state board of accountancy
B)Accountants are expected to place the public interest above all else
C)Accountants are obligated to follow a strict code of ethics
D)Accountants are answerable to firm management,not their clients
Q3) Discuss the role of ethical leadership behavior in public accounting firms and how ethical leadership influences the internal communication and employee outcomes in the organization.
Q4) Ethical leadership failure can be caused by:
A)Lines of communication are blurred
B)Ignoring ethical boundaries within a company
C)Organizational factors promote unethical action
D)All of the above
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