Question 1

The importance of framing the ethical issue in the decision making model is:

Accepted Answer

A)  Identify the stakeholders affected by intended actions 
B)  Evaluating alternative courses of action using moral reasoning methods 
C)  Identify the accounting issues present in a case 
D)  Providing a perspective to apply the decision making model to specific facts of the case

Question 2

Assume you were assigned a term paper and decided to surf the web to identify a provider of papers for a fee. You chose what you thought was the best paper available. With respect to Rest's model of morality it can be said that:

Accepted Answer

A)  Your actions lack moral sensitivity 
B)  You are reasoning at stage 1 
C)  You are making judgments based on the utilitarian method 
D)  You lack the courage of your convictions

Question 3

As an executive in a mid-sized manufacturing firm, Cal finds himself thrown together with Harry, who works for a different unit of the firm. He and Harry are in the same community; their children are in the same schools; they often show up at the same social functions; and they play golf together fairly frequently.
One day, to Cal's deep dismay, he hears that Harry had been implicated in some financial irregularities at work. The issues while serious leave some room for doubt. There is reason to think Harry got ensnared by regulations, though he may have afterwards tried to cover up that entanglement by being less than forthright. Cal has heard from Harry that he was uncomfortable with the way he handled one of the contentious matters. Using Kohlberg's model of moral development, explain what Cal should do with the information he has discovered about Harry.

Accepted Answer

The answer of As an executive in a mid-sized manufacturing...

Question 4

In the Better Boston Beans case, what is the ethical dilemma facing Cindie?

Accepted Answer

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

Question 5

Keesha is the CEO of a publicly-owned company. She was informed by the CFO that the company's earnings were down 30 percent from the prior year due to the recession. The company's stock price has declined by 20 percent. The CFO comes up with a scheme to hide debt and inflate revenues by selling underperforming assets to a special purpose entity affiliated with the company. Keesha is concerned about possible effects on the creditors but ultimately she agrees to the accounting. Keesha is reasoning at:

Accepted Answer

A)  Stage 1 
B)  Stage 2 
C)  Stage 3 
D)  Stage 4

Question 6

Each of the following considerations should help to evaluate alternative courses of action in the decision making model except for:

Accepted Answer

A)  Whether the alternatives are consistent with professional standards 
B)  Whether the alternatives are consistent with firm policies and its own code of ethics 
C)  The stage of moral development of the decision maker 
D)  The potential harms and benefits of alternative courses of action

Question 7

In reference to Rest's four-component Model of Morality, which component reflects an individual's willingness to place ethical values ahead of non-ethical values that relate to self-interest?

Accepted Answer

A)  Moral Character 
B)  Moral Motivation 
C)  Moral Sympathy 
D)  Moral Judgment

Question 8

Rest's "Four Component Model of Morality" can best be described as:

Accepted Answer

A)  A description of the values that influence ethical decision making 
B)  A model of the relationship between ethical action and one's level of moral development 
C)  A model of moral judgment based on one's possession of certain virtues of behavior 
D)  All of these

Question 9

The actions of Diem-Thi Li best illustrate

Accepted Answer

A)  System 1 thinking 
B)  System 2 thinking 
C)  Moral blindness 
D)  Pursuit of self-interests

Question 10

Rosie is the external auditor of Texas Two Steps, a privately-owned dance company in Texas. Rosie believes the owner of the company is skimming cash off the top. She approaches the owner who explains that the money will be replaced in the following month after he refinances his house. Rosie accepts the owner's explanation but reclassifies the expenditure as a receivable of the company from Rosie. Rosie's reasoning best reflects:

Accepted Answer

A)  Stage 1 
B)  Stage 2 
C)  Stage 3 
D)  Stage 4

Question 11

How does the "ethical domain" in accounting and auditing influence professional judgment?

Accepted Answer

The answer of How does the "ethical domain" in accounting...

Question 12

Explain how virtue interacts with moral development in Thorne's Integrated Model of Ethical Decision Making.

Accepted Answer

The answer of Explain how virtue interacts with moral development...

Question 13

Moral sensitivity can be summarized as

Accepted Answer

A)  Being able to think of others first 
B)  Being able to identify the best course of action 
C)  Being able to identify an ethical situation 
D)  Being able to react quickly

Question 14

What are the implications of reasoning at stages 3 and 4?

Accepted Answer

A)  A CPA unable to apply technical accounting standards is unlikely to be influenced by others. 
B)  A CPA is unlikely to be influenced by rules or authority. 
C)  A CPA is unlikely to be influenced or give into pressures. 
D)  A CPA unable to apply technical accounting standards is likely to be influenced by others.

Question 15

Wanda is faced with an ethical dilemma. She knows her supervisor, the CFO, wants to accelerate the recoding of revenue to an earlier period to "make the numbers," but Wanda is convinced this would violate GAAP. If Wanda reasons at stage 4 of Kohlberg's model she is most likely to:

Accepted Answer

A)  Make a decision based on what is in her own best interests 
B)  Consider the interests of the stakeholders but decide based on what is in her best interests 
C)  Refuse to record the transaction as desired by the CFO 
D)  Inform the board of directors of the difference of opinion with the CFO

Question 16

When Sally is asked why she should share her toys with her sister, she responds by saying "Because my mom says I have to and if I don't I'll go to time-out." In which stage of moral development is Sally?

Accepted Answer

A)  Conventional Morality 
B)  Fairness to Others 
C)  Postconventional Morality 
D)  Preconventional Morality

Question 17

The ethical decision making model described in the chapter helps to:

Accepted Answer

A)  Organize the various elements of ethical reasoning and professional judgment 
B)  Evaluate stakeholder interests using ethical reasoning 
C)  Identify and select alternative courses of action 
D)  All of these

Question 18

Each of the following is an element of the operational issues to be considered in the decision making model except for the:

Accepted Answer

A)  Culture of the organization 
B)  Method of moral reasoning 
C)  Internal controls 
D)  Corporate governance system

Question 19

The ethical domain in accounting and auditing refers to:

Accepted Answer

A)  The important constituent groups affected by accounting and auditing work 
B)  The stages of the moral development of accountants and auditors 
C)  The decision making process followed by accountants and auditors 
D)  All of these

Question 20

In stage 1 of Kohlberg's model, ethical reasoning is motivated by:

Accepted Answer

A)  Fear of punishment 
B)  Satisfaction of one's needs 
C)  Following the law 
D)  Acting based on universal ethical principles

Exam 2: Cognitive Processes and Ethical Decision Making in Accounting