Test Bank – Ethical Obligations and
Decision-Making in Accounting: All
Chapters Comprehensive Practice
Questions Latest Study Guide 2026
Integrity - ANSWER-An individual person acts on principle - a conviction that there is a
right way to act when faced with an ethical dilemma
Ethics - ANSWER-the principles of right and wrong that guide an individual in making
decisions
Morals - ANSWER-a person's standards of behavior or beliefs concerning what is and is
not acceptable for them to do.
Values - ANSWER-basic and fundamental beliefs that guide or motivate attitudes or
actions.
Values in Accounting: - ANSWER-independence, integrity, objectivity, professional
skepticism, and due care.
The Golden Rule in Business - ANSWER-wrong to think that separate standards of
behavior exist to guide our personal lives but that a different (lower) standard exists in
business.
Laws - ANSWER-a collection of rules and regulations that come with penalties and
punishments if not followed.
Ethical Legalism - ANSWER-if an intended action is legal, it is, therefore ethical.
Useful Questions to Asked by an Ethical Individual - ANSWER-What does the law
require of me?
What do ethical standards of behavior demand of me?
How should I act to conform to both?
Moral Point of View - ANSWER-requires that a decision maker be willing, at least
sometimes, to take an action that may not be in his/her best interest.
Moral Relativism - ANSWER-the view that moral or ethical statements, which vary from
person to person, are equally valid and no one's opinion of right and wrong is actually
better than any others.
,Ethical Relativism - ANSWER-the philosophical view that what is right or wrong and
good or bad is not absolute but variable and relative, depending on the person,
circumstances, or social situation.
Relativists Points of Argument: - ANSWER-What's right for you may not be what's right
for me.
What's right for my culture won't necessarily be what's right for your culture.
No moral principles are true for all people at all times and in all places.
Cultural Relativism - ANSWER-the same action may be morally right in on society but
be morally wrong in another.
Situation Ethics - ANSWER-recognizes the existence of normative principles but
question whether they should be applied as strict directives or, instead, as guidelines
that agents should use when determining a course of ethical conduct
The Six Pillars of Character - ANSWER-trustworthiness, respect, responsibility,
fairness, caring, citizenship
Virtue Ethics - ANSWER-certain ideals, such as excellence or dedication to the
common good, toward which we should strive and which allow the full development of
our humanity.
Virtues - ANSWER-attitudes, dispositions, or character traits that enable us to be and to
act in ways that develop this potential
Virtues in Aristotelian Ethics - ANSWER-courage, compassion, generosity, fidelity,
integrity, fairness, self-control, and prudence
Trustworthiness Dimensions: - ANSWER-honest, acting with integrity, being reliable,
and exercising loyalty in dealing with others.
Honesty - ANSWER-express the truth as we know is and without deception.
Reliability - ANSWER-ethical obligation for promise keeping includes avoiding bad faith
excuses and unwise commitments.
Loyalty in Accounting - ANSWER-keep financial and other information confidential when
it deals with our employer and client
Respect - ANSWER-treating all people with dignity
Responsibility for Accounting Professionals - ANSWER-To meet one's ethical and
professional obligations when performing services for an employer or client but never
forgetting that it is the public interest that trumps all other interests.
,To act with due care by gathering and evaluating relevant evidence in an audit and
maintaining professional skepticism.
To accept responsibility of one's actions and be accountable for them.
Fairness in Accounting - ANSWER-requires objectivity; the financial and accounting
information needs to be presented free from bias, that is, consistent with the evidence
and not based solely on one's opinion about the proper accounting treatment.
Caring in Accounting - ANSWER-having empathy towards others situations even if the
situations hinders the business activities.
Citizenship in Accounting - ANSWER-responsibilities to one another to advance the
profession and not bring discredit on oneself or others.
Reputation in Accounting - ANSWER-critical to a client's trusting that CPA to perform
services competently and maintain the confidentiality of client information.
Teleology - ANSWER-act is considered morally right or acceptable if it produces some
desired result such as pleasure, the realization of self-interest, fame, utility, wealth, and
so on.
assess the moral worth of behavior by looking at its consequences, often referred to as
consequentialism.
Two important philosophies are egoism and utilitarianism.
Consequentialism - ANSWER-theory about outcomes, not motives or intentions.
Egoism - ANSWER-defines right or acceptable behavior in terms of its consequences
for the individual.
Ethical Egoism - ANSWER-claims that the promotion of one's own goods is in
accordance with morality. Not an acceptable standard for decision making in
accounting.
Enlightened Egoism - ANSWER-emphasizes more of direct action to bring about the
best interests of society.
take a long-range perspective and allow for the well-being of others because they help
achieve some ultimate goal for the decision maker, although their own self-interest
remains paramount.
Rational Egoism - ANSWER-claims the promotion of one's own interest is always in
accordance with reason; an action is rational if only if it maximizes one's self-interest.
, Utilitarianism - ANSWER-seeks to make decisions which bring about the greatest good
for the greatest number of people.
Deontology - ANSWER-focus on the rights of individuals and on the intentions
associated with a particular behavior, rather than on its consequences; moral norms
established the basis for action.
Rights Principles in Accounting - ANSWER-investors and creditors have a right to
accurate and complete financial information, accountants have the duty to ensure that
the financial statements "present fairly" the financial position, results of operations, and
changes in cash flows.
Justice - ANSWER-giving each person what she or he deserves justice and fairness are
closely related terms that are often used interchangeably
Regulation of the Accounting Profession - ANSWER-regulation of a profession is a
specific response to the need for certain standards to be met by the members of the
profession. accounting profession provides an important public service through audits
and other assurance services and those who choose to join the community pledge to
act in the public interest.
Public Interest in Accounting - ANSWER-the P in CPA stands for "public" which reminds
accountants their primary obligation of CPAs is to the public interest.
AICPA - ANSWER-voluntary association of CPAs with more than 418,000 members in
143 countries, including CPAs in business and industry, public accounting, government,
education, student affiliates, and international associates.
Institute of Management Accountants (IMA) - ANSWER-global network of accountants
and financial professionals with more than 75,000 members in 140 countries
Institute of Internal Auditors (IIA) - ANSWER-international professional association
representing the internal audit profession with more than 185,000 members in 170
countries.
Association of Certified Fraud Examiners (ACFE) - ANSWER-world's largest anti-fraud
organization and provider of anti-fraud training and education with 80,000 members.
aims to reduce business fraud worldwide and inspire public confidence in the integrity
and objectivity within the profession.
International Federation of Accountants (IFAC) - ANSWER-global professional body
dedicated to serve the public interest with over 110-member organizations and 185
country profiles.
Decision-Making in Accounting: All
Chapters Comprehensive Practice
Questions Latest Study Guide 2026
Integrity - ANSWER-An individual person acts on principle - a conviction that there is a
right way to act when faced with an ethical dilemma
Ethics - ANSWER-the principles of right and wrong that guide an individual in making
decisions
Morals - ANSWER-a person's standards of behavior or beliefs concerning what is and is
not acceptable for them to do.
Values - ANSWER-basic and fundamental beliefs that guide or motivate attitudes or
actions.
Values in Accounting: - ANSWER-independence, integrity, objectivity, professional
skepticism, and due care.
The Golden Rule in Business - ANSWER-wrong to think that separate standards of
behavior exist to guide our personal lives but that a different (lower) standard exists in
business.
Laws - ANSWER-a collection of rules and regulations that come with penalties and
punishments if not followed.
Ethical Legalism - ANSWER-if an intended action is legal, it is, therefore ethical.
Useful Questions to Asked by an Ethical Individual - ANSWER-What does the law
require of me?
What do ethical standards of behavior demand of me?
How should I act to conform to both?
Moral Point of View - ANSWER-requires that a decision maker be willing, at least
sometimes, to take an action that may not be in his/her best interest.
Moral Relativism - ANSWER-the view that moral or ethical statements, which vary from
person to person, are equally valid and no one's opinion of right and wrong is actually
better than any others.
,Ethical Relativism - ANSWER-the philosophical view that what is right or wrong and
good or bad is not absolute but variable and relative, depending on the person,
circumstances, or social situation.
Relativists Points of Argument: - ANSWER-What's right for you may not be what's right
for me.
What's right for my culture won't necessarily be what's right for your culture.
No moral principles are true for all people at all times and in all places.
Cultural Relativism - ANSWER-the same action may be morally right in on society but
be morally wrong in another.
Situation Ethics - ANSWER-recognizes the existence of normative principles but
question whether they should be applied as strict directives or, instead, as guidelines
that agents should use when determining a course of ethical conduct
The Six Pillars of Character - ANSWER-trustworthiness, respect, responsibility,
fairness, caring, citizenship
Virtue Ethics - ANSWER-certain ideals, such as excellence or dedication to the
common good, toward which we should strive and which allow the full development of
our humanity.
Virtues - ANSWER-attitudes, dispositions, or character traits that enable us to be and to
act in ways that develop this potential
Virtues in Aristotelian Ethics - ANSWER-courage, compassion, generosity, fidelity,
integrity, fairness, self-control, and prudence
Trustworthiness Dimensions: - ANSWER-honest, acting with integrity, being reliable,
and exercising loyalty in dealing with others.
Honesty - ANSWER-express the truth as we know is and without deception.
Reliability - ANSWER-ethical obligation for promise keeping includes avoiding bad faith
excuses and unwise commitments.
Loyalty in Accounting - ANSWER-keep financial and other information confidential when
it deals with our employer and client
Respect - ANSWER-treating all people with dignity
Responsibility for Accounting Professionals - ANSWER-To meet one's ethical and
professional obligations when performing services for an employer or client but never
forgetting that it is the public interest that trumps all other interests.
,To act with due care by gathering and evaluating relevant evidence in an audit and
maintaining professional skepticism.
To accept responsibility of one's actions and be accountable for them.
Fairness in Accounting - ANSWER-requires objectivity; the financial and accounting
information needs to be presented free from bias, that is, consistent with the evidence
and not based solely on one's opinion about the proper accounting treatment.
Caring in Accounting - ANSWER-having empathy towards others situations even if the
situations hinders the business activities.
Citizenship in Accounting - ANSWER-responsibilities to one another to advance the
profession and not bring discredit on oneself or others.
Reputation in Accounting - ANSWER-critical to a client's trusting that CPA to perform
services competently and maintain the confidentiality of client information.
Teleology - ANSWER-act is considered morally right or acceptable if it produces some
desired result such as pleasure, the realization of self-interest, fame, utility, wealth, and
so on.
assess the moral worth of behavior by looking at its consequences, often referred to as
consequentialism.
Two important philosophies are egoism and utilitarianism.
Consequentialism - ANSWER-theory about outcomes, not motives or intentions.
Egoism - ANSWER-defines right or acceptable behavior in terms of its consequences
for the individual.
Ethical Egoism - ANSWER-claims that the promotion of one's own goods is in
accordance with morality. Not an acceptable standard for decision making in
accounting.
Enlightened Egoism - ANSWER-emphasizes more of direct action to bring about the
best interests of society.
take a long-range perspective and allow for the well-being of others because they help
achieve some ultimate goal for the decision maker, although their own self-interest
remains paramount.
Rational Egoism - ANSWER-claims the promotion of one's own interest is always in
accordance with reason; an action is rational if only if it maximizes one's self-interest.
, Utilitarianism - ANSWER-seeks to make decisions which bring about the greatest good
for the greatest number of people.
Deontology - ANSWER-focus on the rights of individuals and on the intentions
associated with a particular behavior, rather than on its consequences; moral norms
established the basis for action.
Rights Principles in Accounting - ANSWER-investors and creditors have a right to
accurate and complete financial information, accountants have the duty to ensure that
the financial statements "present fairly" the financial position, results of operations, and
changes in cash flows.
Justice - ANSWER-giving each person what she or he deserves justice and fairness are
closely related terms that are often used interchangeably
Regulation of the Accounting Profession - ANSWER-regulation of a profession is a
specific response to the need for certain standards to be met by the members of the
profession. accounting profession provides an important public service through audits
and other assurance services and those who choose to join the community pledge to
act in the public interest.
Public Interest in Accounting - ANSWER-the P in CPA stands for "public" which reminds
accountants their primary obligation of CPAs is to the public interest.
AICPA - ANSWER-voluntary association of CPAs with more than 418,000 members in
143 countries, including CPAs in business and industry, public accounting, government,
education, student affiliates, and international associates.
Institute of Management Accountants (IMA) - ANSWER-global network of accountants
and financial professionals with more than 75,000 members in 140 countries
Institute of Internal Auditors (IIA) - ANSWER-international professional association
representing the internal audit profession with more than 185,000 members in 170
countries.
Association of Certified Fraud Examiners (ACFE) - ANSWER-world's largest anti-fraud
organization and provider of anti-fraud training and education with 80,000 members.
aims to reduce business fraud worldwide and inspire public confidence in the integrity
and objectivity within the profession.
International Federation of Accountants (IFAC) - ANSWER-global professional body
dedicated to serve the public interest with over 110-member organizations and 185
country profiles.
