Business & Professional Ethics for Directors, Executives & Accountants, 5e
Multiple Choice Questions
Chapter 1 The Ethics Environment
1) The difference between what the public thinks it is getting in audited financial
statements and what the public is actually getting is known as:
a. Credibility gap
b. Expectations gap
c. Audit gap
d. Stewardship gap
e. None of the above
ANSWER: b
2) Which of the following is not a trend described in Chapter 1 as having an impact on
the ethics of business?
a. Directors’ legal liability
b. Management’s stated intention to protect reputation
c. Auditors’ legal liability
d. Management’s assertions to shareholders on the adequacy of internal controls
e. Management’s stated intention to manage risk
ANSWER: c
,3) Which corporate report discusses subjects that include environmental, health and
safety, philanthropic and other social impacts?
a. Corporate annual report
b. Corporate social responsibility report
c. Corporate quarterly report
d. Corporate stakeholder report
e. Corporate ethics committee report
ANSWER: b
4) Professional Accountants, in their fiduciary role, owe their primary loyalty to:
a. The accounting profession
b. The client
c. The general public
d. Government regulations
e. All of the above
ANSWER: c
5) Ethical corporate behavior is expected to lead to:
a. Higher profitability in the short-term
b. Higher profitability both in the short-term and long-term
c. Lower profitability in the long-term
d. Higher profitability in the long-term
e. Lower profitability both in the short-term and long-term
ANSWER: d
6) Examining the interests of stakeholders is probably required for:
, a. High short-term profits
b. Optimal medium and longer-term profits
c. Continuing support from stakeholder groups
d. Effective risk management
e. All of the above
ANSWER: a
7) A value that is almost universally respected by stakeholder groups is:
a. Super norm
b. Alfa norm
c. Value norm
d. Hypernorm
e. General norm
ANSWER: d
8) Since the mid-1990s, both management and auditors have become increasingly:
a. Profit management oriented
b. Ethics oriented
c. Value management oriented
d. Risk management oriented
e. Marketing oriented
ANSWER: d or b
9) The following are determinants of reputation:
, a. Trustworthiness and Responsibility
b. Credibility, Responsibility and Relevance
c. Responsibility and Impartiality
d. Relevance and Impartiality
e. Relevance, Credibility and Responsibility
ANSWER: a
10) The following would be a key control function of the Board of Directors:
a. Set guidance and boundaries
b. Appoint CEO
c. Approve the sale of company’s assets
d. Decide on the company’s auditor
e. All of the above
ANSWER: e
11) Companies attempt to manage the risk of something happening that will have a
negative or positive impact on the company’s objectives, such as:
a. Credit risks
b. Litigation risk
c. Reputation risk
d. Ethics risks
e. All of the above
ANSWER: e
Multiple Choice Questions
Chapter 1 The Ethics Environment
1) The difference between what the public thinks it is getting in audited financial
statements and what the public is actually getting is known as:
a. Credibility gap
b. Expectations gap
c. Audit gap
d. Stewardship gap
e. None of the above
ANSWER: b
2) Which of the following is not a trend described in Chapter 1 as having an impact on
the ethics of business?
a. Directors’ legal liability
b. Management’s stated intention to protect reputation
c. Auditors’ legal liability
d. Management’s assertions to shareholders on the adequacy of internal controls
e. Management’s stated intention to manage risk
ANSWER: c
,3) Which corporate report discusses subjects that include environmental, health and
safety, philanthropic and other social impacts?
a. Corporate annual report
b. Corporate social responsibility report
c. Corporate quarterly report
d. Corporate stakeholder report
e. Corporate ethics committee report
ANSWER: b
4) Professional Accountants, in their fiduciary role, owe their primary loyalty to:
a. The accounting profession
b. The client
c. The general public
d. Government regulations
e. All of the above
ANSWER: c
5) Ethical corporate behavior is expected to lead to:
a. Higher profitability in the short-term
b. Higher profitability both in the short-term and long-term
c. Lower profitability in the long-term
d. Higher profitability in the long-term
e. Lower profitability both in the short-term and long-term
ANSWER: d
6) Examining the interests of stakeholders is probably required for:
, a. High short-term profits
b. Optimal medium and longer-term profits
c. Continuing support from stakeholder groups
d. Effective risk management
e. All of the above
ANSWER: a
7) A value that is almost universally respected by stakeholder groups is:
a. Super norm
b. Alfa norm
c. Value norm
d. Hypernorm
e. General norm
ANSWER: d
8) Since the mid-1990s, both management and auditors have become increasingly:
a. Profit management oriented
b. Ethics oriented
c. Value management oriented
d. Risk management oriented
e. Marketing oriented
ANSWER: d or b
9) The following are determinants of reputation:
, a. Trustworthiness and Responsibility
b. Credibility, Responsibility and Relevance
c. Responsibility and Impartiality
d. Relevance and Impartiality
e. Relevance, Credibility and Responsibility
ANSWER: a
10) The following would be a key control function of the Board of Directors:
a. Set guidance and boundaries
b. Appoint CEO
c. Approve the sale of company’s assets
d. Decide on the company’s auditor
e. All of the above
ANSWER: e
11) Companies attempt to manage the risk of something happening that will have a
negative or positive impact on the company’s objectives, such as:
a. Credit risks
b. Litigation risk
c. Reputation risk
d. Ethics risks
e. All of the above
ANSWER: e
