Ethics Chapter 2 - Correct Answers only

1. 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?

D. Preconventional Morality

2. 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?

B. Moral Motivation

3. The cognitive development approach refers to:

A. The thought process followed in one's moral development

4. Kohlberg's model can best be described as:

A. The various phases in one's moral development and related levels of moral reasoning

5. In the "Heinz and the Drug" case described in the chapter, Heinz's actions falls into which of Kohlberg's stages?

C. Stage 3

6. Heinz stole the drug because:
A. He loved his wife
B. He couldn't come up with all the money to pay for it
C. He was afraid his wife would die without the drug
D. All of these

D. All of these

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

A. Fear of punishment

8. In stage 3 of Kohlberg's model, ethical reasoning is motivated by:

B. Acting in the best interests of others

9. In stage 5 of Kohlberg's model, ethical reasoning is motivated by:

C. Upholding the rights, values, and legal contracts of society

10. Individuals who reason at stage 6 incorporate ethical reasoning based on:
A. The morality of law and duty to the social order
B. A rational calculation of benefits and harms to society
C. Universal ethical principles
D. All of these

D. All of these

11. A client asks his accountant to ignore a mistake which overstated the accounts receivable account. The accountant decides that the accounts receivable account has to be corrected to state the correct amount.

The accountant makes his decision based on his duty to society, respect for authority, and maintaining the social order. Which stage of Kohlberg' Stages of Moral Development is the accounting reasoning? C. Stage 4

12. The ethical domain in accounting and auditing refers to:

A. The important constituent groups affected by accounting and auditing work

13. The results of studies indicate that CPAs reason primarily at:

C. Stages 3 and 4

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

B. A model of the relationship between ethical action and one's level of moral development

15. 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:

A. Your actions lack moral sensitivity

16. The actions of Sherron Watkins in the Enron case appears to reflect each of the following except for:

D. Professional skepticism

17. Yvonne is preparing a tax return for Jack. Jack wants to claim his nephew as a dependent even though he does not meet the criteria. Jack says if Yvonne does not list his nephew as a dependent, he will fire her and find a new tax accountant.

Yvonne refuses because it is illegal to claim a dependent that does not meet the qualifications. Based on Yvonne's decision, she is likely reasoning in which stage of Kohlberg's moral development model? C. Stage 4

18. James Rest's model of ethical action involves four components inherent to the ethical decision-making process. Which of the following relates to a person's moral judgment?

D. Outcome of one's prescriptive reasoning

19. Thorne's "Integrated Model of Ethical Decision Making" can best be described as:

D. A model of the role of moral development and virtue in decision making

20. In Thorne's model of ethical decision making, the instrumental virtues relate to:

D. Ethical character

21. The ethical decision making model described in the chapter helps to:
A. Organize the various elements of ethical reasoning and professional judgment
B. Evaluate stakeholder interests using ethical reasoning
C. Identify and select alternative courses o

D. All of these

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

D. Providing a perspective to apply the decision making model to specific facts of the case

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

B. Method of moral reasoning

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

C. The stage of moral development of the decision maker

25. 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'

C. Refuse to record the transaction as desired by the CFO

26. 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

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: B. Stage 2

27. 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 mo

Rosie accepts the owner's explanation but reclassifies the expenditure as a receivable of the company from Rosie. Rosie's reasoning best reflects: D. Stage 4

28. Steve is in charge of accounting for the purchase of equipment at Cal Works, Inc. The company has a policy that all expenditures less than $1,000 must be expensed. Steve decides to take a $900 expenditure and separate $600 one and

combine them into one $1,500 expenditure so that the total can be capitalized thereby eliminating the effects on income. Steve's actions can be characterized as: A. Lacking in of moral sensitivity

29. Role expectation or approval from others is a motive for doing right in which stage of Kohlberg's moral reasoning?

A. Fairness to others

30. At which stage of Kohlberg's view on ethical development is an individual's actions influenced by group norms?

C. Stage 3

31. How does Gilligan evaluate the solution to Heinz's dilemma?

C. Men tend to think in terms of justice, and women in terms of caring.

32. Rest's components of a moral model include all but

B. Moral development

33. Moral sensitivity can be summarized as

C. Being able to identify an ethical situation

34. What needs to be coupled with moral motivation to act on moral judgment?

A. Courage

35. Kohlberg's model suggests that a person

B. continues to change decision priorities with education and experiences

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

D. A CPA unable to apply technical accounting standards is likely to be influenced by others.

37. What should be the first step in decision making when faced with an ethical dilemma?

C. Get the facts surrounding the problem

38. Diem-Thi Le felt retaliated against for whistle-blowing at the DCAA. Her persistence and determination to see audits change at DCAA exemplify

A. Moral Character

39. The best way to characterize the efforts of Diem-Thi Le is that of a

B. Whistleblower

40. The actions of Diem-Thi Li best illustrate

B. System 2 thinking

41. Cynthia Cooper's actions in the WorldCom case can be best characterized as demonstrating:

B. Persistence and courage

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

B. Trust of co-worker versus the honesty of the workplace

43. The ethical dilemma for Brenda in "The Tax Return" case can best be described as a:

A. Conflict between loyalty to one's supervisor and doing the right thing

44. The ethical dilemma in the "Shifty Industries" case can best be described as whether to:

C. Maximizing section 179 depreciation expense

45. In "Blues Brothers" the initial dilemma facing the internal accountant is whether to:

A. Prematurely record revenue and give in to pressure from the supervisor

46. Kevin Greenberg's actions in the "Supreme Designs" case can be said to have been:

D. Undertaken with the intent to help out his supervisor

47. The "Milton Manufacturing" case illustrates:

A. What can go wrong when a company sets a policy that potentially harms one area of its operations

48. The main accounting issue in the Juggyfroot case is:

D. How to account for investments in marketable securities

49. In the Phar-Mor case, Pat Finn's actions reflect ethical reasoning at what stage?

C. Stage 3

50. In the Gateway Hospital case, Troy:

C. Wants to be treated differently than Kristen with respect to expense reimbursement because of personal considerations