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g g g g g g g g g g
tors Executives Accountants 8th Edition Brooks
g g g g g
Businessg&gProfessionalgEthicsgforgDirectors,gExecutivesg&gAccountants,g6e
Multiple Choice Questions
g g
Chapterg2g g Ethicsg&gGovernancegScandals
1. Asgagresultgofgthegspectaculargstockgmarketgcrashging1929,gtheggovernmentgimplementgthe
SecuritiesgActgofg1933,gthegSecuritiesgActgofg1934,gasgwellgasgwhichgofgthegfollowinggacts:
a. Glass-SteagallgAct
b. InvestmentgAdvisersgAct
c. Gramm-Leach-BlileygAct
d. Allgofgthegabove
e. Onlygagandgbg
ANSWER: e
2. Ing1984,gEdwardgFreemengpublishedgangarticlegongstakeholdergtheory.gWhichgofgthegfollowinggi
sgnotgtrue?
a. Agfirmgneedsgthegsupportgofgitsgstakeholdersgtogenhancegthegfirm’sgreputation.
b. Stakeholdergtheorygtookgyearsgtogmature.
c. Stakeholdergtheorygisgnotgagusefulgframeworkgforgthoseginterestedginggovernance.
d. Firmsgneedgstakeholdersgtogachievegtheirgcorporategobjectives.
e. Stakeholdergtheorygoccurredgatgthegsamegtimegasgthegrisegingsocialgandgcorporatega
ctivism.
ANSWER: c
3. WhichgofgthegfollowinggisgnotgcoveredgundergthegSarbanes-OxleygActgofg2002g(SOX)?
a. Thegresponsibilitiesgofgshareholders
b. Thegresponsibilitiesgofgthegboardgofgdirectors
c. Thegresponsibilitiesgofgmanagement
d. Thegresponsibilitiesgofgauditors
e. Conflictsgofginterestg
ANSWER:g a
4. ThegoverallgrequirementgofgthegInternalgRevenuegServicegCircularg230gisgtogensuregthatgtaxgp
rofessionals:
a. Knowgtheirgclients
b. Alwaysgdevelopgtaxgplansgforgtheirgclients
c. Makegtaxgplanninggsuggestionsgthat,gevengifgtheygdon’tghavegagchancegofgsuccess,gwillgs
avegthegclientgsomegmoneygingthegshort-term
d. Nevergdevelopgtaxgshelters
e. Onlygbegprofessionalgaccountantsg
ANSWER:g a
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tors Executives Accountants 8th Edition Brooks
g g g g g
5. Agcollateralizedgdebtgobligationg(CDO):
a. Isganginsurancegpolicygthatganyginvestorgcangpurchase
b. Isgagbondgthatgisgsecuredgbygagportfoliogofgmortgages
c. Protectsganginvestorgingthegeventgthatgthegissuergofgthegmortgagegdefaultsgongthegc
ontract
d. Actsgasgaghedgegagainstgchangesginginterestgrates
e. WeregoutlawedgwithgthegpassagegofgthegDodd-
FrankgWallgStreetgReformgandgConsumergProtectiongAct.
ANSWER:g b
6. Whichgofgthegfollowinggisgnotgagsigngofgangethicalgcollapsegwithingangorganization,gaccordinggt
ogMariannegJennings?
a. Pressuregtogmeetgfinancialggoals
b. Hubris
c. Nepotism,gfavoritismgandghiringgsycophants
d. Angopengandgcandidgorganizationalgculture
e. Weakgboardsgofgdirectorsg
ANSWER:g d
7. ThegU.S.gFederalgSentencinggGuidelinesgweregintroducedging1991gto:
a. Helpgjudgesgformulategsentences.
b. Avoidgsentencesgthatgaregtooglight.
c. Signalgpotentialgsentencesgtogexecutivesgandgdirectors.
d. Encouragegexecutivesgandgdirectorsgtogavoidgenvironmentalgdamage.
e. Allgofgthegabove.
ANSWER:ge
8. DuegdiligencegprogramsgdevelopedgtogreducegpenaltiesgleviedgundergthegU.S.gFederalg
SentencinggGuidelinesgforgenvironmentalgharmgdidgnotginclude:
a. Awarenessgprogramsgforgemployees.
b. Guidelinesgforgemployees.
c. Compliancegoversightgbygcorporategofficials.
d. Rewardsgforgnon-compliance.
e. Encouragementgforgwhistleblowers.
ANSWER:gd
9. WhichgofgthegfollowinggfinancialgcrisesgorgfiascosgweregnotgrelatedgtogthegSubprimegLendingg
Crisis?
a. BeargStearns
b. LehmangBrothers
c. BerniegMadoff
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g g g g g g g g g g
tors Executives Accountants 8th Edition Brooks
g g g g g
d. AIG
e. GalleongGroup
g ANSWER:gcgandge
10. Whichgwasgtheglargestgfraudgorgbankruptcygleadinggtogthegcrisisgofginvestorgconfidenceging2
002?
a. Enron
b. GlobalgCrossing
c. WorldCom
d. HIHgInsurance
e. XeroxgANS
WER:gWorldCom
11. Thegcrisisginginvestorgconfidenceging2002gwasgcausedgby:
a. Lackgofgintegritygofgbusinessgleaders.
b. Manipulationgofgfinancialgresults.
c. BoardsgofgDirectorsgthatgdidgnotgprovidegpropergoversight.
d. Findingsgofgalertgauditors
e. Allgofgthegabove.
ANSWER:ga,gb,gandgc.
12. SOXgcontainedgsectionsgwithgregardgtogthegauditgand/orgauditgcommitteegthatgweregdesignedgt
o:
a. Increasegthegindependencegofgmanagement.
b. Increasegthegfinancialgliteracygofgauditgcommitteegmembers.
c. Limitgthegconflictsgofginterestgrelatedgtogthegservicesgangauditorgcangperform.
d. Restrictgthegabilitygofgauditorsgtogservegongthegauditgcommittee.
e. Allgofgthegabove.
ANSWER:gbgandgc
13. ThegU.S.gInternalgRevenuegServiceg(IRS)gimplementedgCircularg230gtogremedygproblemsgf
oundgwithgregardgtogthegmarketinggofgtaxgsheltersgthoughtgto:
a. Havegnogothergpurposegexceptgtogreducegtaxes.
b. Haveglowergthang50%gchancegofgsuccessgifgchallengedgbygthegIRS.
c. Notgbegingaccordancegwithgclient’sgneeds.
d. Creategfictitiousglosses.
e. Allgofgthegaboveg
ANSWER:ge
14. Whygdidn’tginvestorsgcaughtgingthegSubprimegLendinggCrisisgtakegearliergnotegofgthegrisksgi
nherentginginvestmentsgknowngasgcollateralizedgdebtgasgobligationsg(CDOs)?
mynursytest.store
g g g g g g g g g g
tors Executives Accountants 8th Edition Brooks
g g g g g
Businessg&gProfessionalgEthicsgforgDirectors,gExecutivesg&gAccountants,g6e
Multiple Choice Questions
g g
Chapterg2g g Ethicsg&gGovernancegScandals
1. Asgagresultgofgthegspectaculargstockgmarketgcrashging1929,gtheggovernmentgimplementgthe
SecuritiesgActgofg1933,gthegSecuritiesgActgofg1934,gasgwellgasgwhichgofgthegfollowinggacts:
a. Glass-SteagallgAct
b. InvestmentgAdvisersgAct
c. Gramm-Leach-BlileygAct
d. Allgofgthegabove
e. Onlygagandgbg
ANSWER: e
2. Ing1984,gEdwardgFreemengpublishedgangarticlegongstakeholdergtheory.gWhichgofgthegfollowinggi
sgnotgtrue?
a. Agfirmgneedsgthegsupportgofgitsgstakeholdersgtogenhancegthegfirm’sgreputation.
b. Stakeholdergtheorygtookgyearsgtogmature.
c. Stakeholdergtheorygisgnotgagusefulgframeworkgforgthoseginterestedginggovernance.
d. Firmsgneedgstakeholdersgtogachievegtheirgcorporategobjectives.
e. Stakeholdergtheorygoccurredgatgthegsamegtimegasgthegrisegingsocialgandgcorporatega
ctivism.
ANSWER: c
3. WhichgofgthegfollowinggisgnotgcoveredgundergthegSarbanes-OxleygActgofg2002g(SOX)?
a. Thegresponsibilitiesgofgshareholders
b. Thegresponsibilitiesgofgthegboardgofgdirectors
c. Thegresponsibilitiesgofgmanagement
d. Thegresponsibilitiesgofgauditors
e. Conflictsgofginterestg
ANSWER:g a
4. ThegoverallgrequirementgofgthegInternalgRevenuegServicegCircularg230gisgtogensuregthatgtaxgp
rofessionals:
a. Knowgtheirgclients
b. Alwaysgdevelopgtaxgplansgforgtheirgclients
c. Makegtaxgplanninggsuggestionsgthat,gevengifgtheygdon’tghavegagchancegofgsuccess,gwillgs
avegthegclientgsomegmoneygingthegshort-term
d. Nevergdevelopgtaxgshelters
e. Onlygbegprofessionalgaccountantsg
ANSWER:g a
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g g g g g g g g g g
tors Executives Accountants 8th Edition Brooks
g g g g g
5. Agcollateralizedgdebtgobligationg(CDO):
a. Isganginsurancegpolicygthatganyginvestorgcangpurchase
b. Isgagbondgthatgisgsecuredgbygagportfoliogofgmortgages
c. Protectsganginvestorgingthegeventgthatgthegissuergofgthegmortgagegdefaultsgongthegc
ontract
d. Actsgasgaghedgegagainstgchangesginginterestgrates
e. WeregoutlawedgwithgthegpassagegofgthegDodd-
FrankgWallgStreetgReformgandgConsumergProtectiongAct.
ANSWER:g b
6. Whichgofgthegfollowinggisgnotgagsigngofgangethicalgcollapsegwithingangorganization,gaccordinggt
ogMariannegJennings?
a. Pressuregtogmeetgfinancialggoals
b. Hubris
c. Nepotism,gfavoritismgandghiringgsycophants
d. Angopengandgcandidgorganizationalgculture
e. Weakgboardsgofgdirectorsg
ANSWER:g d
7. ThegU.S.gFederalgSentencinggGuidelinesgweregintroducedging1991gto:
a. Helpgjudgesgformulategsentences.
b. Avoidgsentencesgthatgaregtooglight.
c. Signalgpotentialgsentencesgtogexecutivesgandgdirectors.
d. Encouragegexecutivesgandgdirectorsgtogavoidgenvironmentalgdamage.
e. Allgofgthegabove.
ANSWER:ge
8. DuegdiligencegprogramsgdevelopedgtogreducegpenaltiesgleviedgundergthegU.S.gFederalg
SentencinggGuidelinesgforgenvironmentalgharmgdidgnotginclude:
a. Awarenessgprogramsgforgemployees.
b. Guidelinesgforgemployees.
c. Compliancegoversightgbygcorporategofficials.
d. Rewardsgforgnon-compliance.
e. Encouragementgforgwhistleblowers.
ANSWER:gd
9. WhichgofgthegfollowinggfinancialgcrisesgorgfiascosgweregnotgrelatedgtogthegSubprimegLendingg
Crisis?
a. BeargStearns
b. LehmangBrothers
c. BerniegMadoff
mynursytest.store
, DOWNLOAD THE Test Bank for Business and Professional Ethics for Direc
g g g g g g g g g g
tors Executives Accountants 8th Edition Brooks
g g g g g
d. AIG
e. GalleongGroup
g ANSWER:gcgandge
10. Whichgwasgtheglargestgfraudgorgbankruptcygleadinggtogthegcrisisgofginvestorgconfidenceging2
002?
a. Enron
b. GlobalgCrossing
c. WorldCom
d. HIHgInsurance
e. XeroxgANS
WER:gWorldCom
11. Thegcrisisginginvestorgconfidenceging2002gwasgcausedgby:
a. Lackgofgintegritygofgbusinessgleaders.
b. Manipulationgofgfinancialgresults.
c. BoardsgofgDirectorsgthatgdidgnotgprovidegpropergoversight.
d. Findingsgofgalertgauditors
e. Allgofgthegabove.
ANSWER:ga,gb,gandgc.
12. SOXgcontainedgsectionsgwithgregardgtogthegauditgand/orgauditgcommitteegthatgweregdesignedgt
o:
a. Increasegthegindependencegofgmanagement.
b. Increasegthegfinancialgliteracygofgauditgcommitteegmembers.
c. Limitgthegconflictsgofginterestgrelatedgtogthegservicesgangauditorgcangperform.
d. Restrictgthegabilitygofgauditorsgtogservegongthegauditgcommittee.
e. Allgofgthegabove.
ANSWER:gbgandgc
13. ThegU.S.gInternalgRevenuegServiceg(IRS)gimplementedgCircularg230gtogremedygproblemsgf
oundgwithgregardgtogthegmarketinggofgtaxgsheltersgthoughtgto:
a. Havegnogothergpurposegexceptgtogreducegtaxes.
b. Haveglowergthang50%gchancegofgsuccessgifgchallengedgbygthegIRS.
c. Notgbegingaccordancegwithgclient’sgneeds.
d. Creategfictitiousglosses.
e. Allgofgthegaboveg
ANSWER:ge
14. Whygdidn’tginvestorsgcaughtgingthegSubprimegLendinggCrisisgtakegearliergnotegofgthegrisksgi
nherentginginvestmentsgknowngasgcollateralizedgdebtgasgobligationsg(CDOs)?
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