Professional Ethics in Accounting Exam Bank
Course Introduction
Professional Ethics in Accounting explores the moral principles and values that guide the behavior of accountants in their professional duties. This course examines ethical theories, regulatory frameworks, and codes of conduct relevant to accounting professionals. Topics include integrity, objectivity, confidentiality, and professional skepticism, as well as addressing ethical dilemmas and the implications of unethical behavior. Case studies and real-world scenarios are used to develop ethical decision-making skills and to emphasize the importance of maintaining public trust in the accounting profession.
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 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
Answer: B
Q2) 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
Answer: C
Q3) 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
Answer: D
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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) What ethical action should Daniel take in A Faulty Budget?
A)Work with Pete to correct the budget so Cwervo,Pete's boss,does not find out.
B)Work with Pete to keep quiet about the mistake in the budget so the new hires will not be laid off.
C)Tell Cwervo about the mistake in the budget but only half of the actual mistake so that employees will not be laid off.
D)Tell Cwervo about the mistake in the budget so the company can make corrections as soon as possible.
Answer: D
Q2) Which of the following characteristics is NOT part of the behavioral approach,Giving Voice to Values?
A)Used post-decision-making
B)Capacity to express one's values
C)Employs traditional philosophical reasoning
D)Counteracts reasons and rationalizations
Answer: C
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4
Chapter 3: Organizational Ethics and Corporate Governance
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86 Verified Questions
86 Flashcards
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Sample Questions
Q1) Strong corporate governance relies on a strong board of directors.Which of the following would be a strong candidate to be a board director for XYZ,Inc.?
A)Community member who has already served on the board for 15 years.
B)Investor who has a multi-million-dollar joint venture with the CEO and CFO.
C)Retired controller of a Fortune 500 company.
D)Community member who receives annual large consulting contracts from XYZ.
Answer: C
Q2) Corporate governance structures and relationships are shaped by internal and external mechanisms.Which of the following is an external mechanism?
A)State and federal statues require a baseline corporate governance system
B)Audit committees must consist of at least three members all of whom are independent of management and the entity
C)All directors must be independent of management
D)Each listed company must have an internal audit function
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) The Tax Shelters case deals with:
A)Ignoring the recording of lottery gains in a client's tax return
B)Changing culture in the tax department of a CPA firm
C)Pressure from one's superior to manipulate financial statements
D)Whether to sell tax shelter products to members of the audit firm
Q2) The CPA firm that became involved in tax shelter controversies with the IRS is:
A)Ernst & Young
B)Deloitte & Touche
C)PricewaterhouseCoopers
D)KPMG
Q3) One of the Contributions of the Treadway Commission Report and the work of the Committee of Sponsoring Organizations (COSO) was:
A)To establish a voluntary process for peer review
B)To identify red flags that might lead to fraud
C)To identify the tone at the top for management to create an ethical culture
D)To establish peer review requirements for CPAs
Q4) Why do CPAs have to be aware of ethical conflicts in performing professional services and which rules of conduct are most directly affected by the evaluation? How do CPAs assess risks due to ethical conflicts and possible impairments of the rules?
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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) The Committee of Sponsoring Organizations of the Treadway Committee (COSO) analyzed the financial reporting of public companies during the 1998-2007 periods when business failures due to accounting fraud were high and found that:
A)Top management was frequently involved in the fraud with the CEO and/or CFO being the most frequently involved
B)The most common fraud technique involved understating expenses
C)The audit committee always sanctioned the fraud
D)A minority of audit reports issued during the fraud period contained unqualified audit opinions
Q2) An example of fraudulent financial statements is:
A)Misrepresentation of events,transactions,and other significant events in the financial statements
B)Failure to provide adequate documentation to support financial statements assertions
C)Aggressive accounting for transactions,events,or other significant matters
D)Misappropriation of assets
Q3) Why is materiality one of the most difficult judgments to make in auditing financial statements?
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Page 7
Chapter 6: Legal, Regulatory, and Professional Obligations of Auditors
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81 Verified Questions
81 Flashcards
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Sample Questions
Q1) One feature of a corporate governance system commonly found outside the U.S.is:
A)Unitary board of directors
B)Dual system of boards of directors
C)No board of directors
D)Acceptance of facilitating payments and bribery
Q2) An audit engagement letter:
A)Offers an auditor's services to a client
B)Is required by generally accepted auditing standards (GAAS)
C)Details the SEC's expectations for the audit firm for a specific engagement
D)Formalizes the relationship between the auditor and the client for a specific engagement
Q3) The key element that protects an auditor against common law liability is:
A)Adherence to generally accepted accounting principles (GAAP)
B)Adherence to generally accepted auditing standards (GAAS)
C)Compliance with threats and safeguards approach
D)Maintain confidentiality of client information
Q4) Cite specific cases to support your answer to question 1 about the differences between common law and statutory law legal liability of auditors.
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Q5) Distinguish between an auditor's legal liability under common law and statutory law.
Chapter 7: Earnings Management
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Sample Questions
Q1) Which of the following has NOT been found to be a measure of a non-GAAP financial metric?
A)Earnings before depreciation and amortization
B)Operating income before certain non-recurring expense or revenue items
C)EBITDA
D)GAAP earnings
Q2) What is the SEC's position on companies that communicate with investors on social media?
A)It is illegal to do so
B)It is legal so long as companies inform investors which outlets they intend to use
C)It is legal so long as the postings are restricted to Facebook
D)There are no limitations on companies communicating through social media
Q3) Sarah's concern in the Solutions Network case is:
A)Expenses were delayed at year-end to manage earnings
B)Revenue was recorded at year-end before the agreement with the customer was finalized
C)Revenue was accelerated into an earlier period through channel stuffing
D)Off-balance sheet entities were not disclosed
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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) The statement about leadership attributed to John Maxwell is:
A)Visions are not simple goals,but rather ways of seeing the future that implicitly or explicitly entail some notion of the good
B)Principle-centered leaders build greater,more trusting and communicative relationships with others in the workplace
C)Leaders lead by example not based on what they say
D)Leaders always follow the law even if it deviates from ethical action
Q2) 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.
Q3) On an organizational level,the key issue in the Parmalat case is:
A)The influence of moral intensity on ethical decision making
B)The influence of ethical leadership on accounting and auditing
C)The role of ethical leadership and corporate governance in the accounting fraud
D)The role of professional skepticism and moral intensity in corporate governance and accounting fraud
Q4) Discuss how moral intensity,organizational culture,and ethical leadership influence behavior in accounting.
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