Chapter 1: Overview of professional ethics:

Question 1: The difference between Morals and Ethics

A. Ethics may differ from society to society; Morals are generally uniform

B. Ethics response to a specific situation; Morals are general principles set by group

C. Morals have applicability in business, Ethics is no

D. A & B are correct

Answer B

Question 2: Four steps towards understanding professional ethic

A. Ethics -> Morals -> Business Ethics -> Professional Ethics

B. Ethics -> Morals -> Professional Ethics -> Business Ethics

C. Morals -> Ethics -> Professional Ethics -> Business Ethics

D. Morals -> Ethics -> Business Ethics -> Professional Ethics

Answer D

Question 3: How can accountants demonstrate accountability?

A. By questioning work given to them

B. By taking responsibility for a mistake

C. By ensuring their work is free from error

D. By replying to an email on behalf of an unavailable colleagues

Answer B

Question 4: The following statement is true?

A. Professional accountants are expected to have regard to the public interest in performing
their duties

B. Ethical values describe what the entity does, not how it does business

C. The professional accountant is not bound by the principles of confidentiality after the end
of the relationship with a client or employer
D. The five qualities and virtues sought by CIMA are reliability, accountability, fairness,
responsibility, and timeless.

Answer A

Question 5: Which three of the following allow accountants to demonstrate the

professional quality of skepticism?

A. By keeping their mind free from distractions

B. By seeking supporting evidence before accepting information is accurate

C. By being straightforward and honest at all times

D. All of the answers are right.

Answer B

Question 6: Which of the following statements best describes corporate responsibility?

A. The company must appear ethically in all its marketing materials

B. The company must put the needs of the community, its shareholders and employees at the
heart of all its decisions

C. The company develops policies on issues such as how to support the local community and
charities to ensure it plays a positive role in its local area

D. The company must develop relationships with its stakeholders so it can learn from them
and meet their needs in a more efficient and environmentally friendly way

Answer B

Question 7: Under which circumstance might an accountant have to disclose

confidential information give to them?

A. When requested by a regulator

B. When requested by a lawyer

C. When requested by a fellow employee or client

D. When requested by an employer

Answer A
Question 8: Which three of the following explain why the principle of integrity is
important?

A. To prevent passing on misinformation

B. To enhance the credibility of an accountant’s work

C. To ensure straightforward and honest dealings

D. All of the answers are right.

Answer D

Question 9: Which statement describes the principle of objectivity that is set out by the
UK government?

A. By following this principle, an accountant minimizes the risk of passing on incorrect

information.

B. Following this principle requires an accountant to keep their mind free from bias.

C. Following this principle requires an accountant to stay technically up to date.

D. Following this principle requires scepticism and close attention to detail when reviewing
information

Answer B

Question 10: Which of the following are included in the seven principles of public life
that is set out by the UK government?

A. Selflessness

B. Boldness

C. Leadership

D. Obedience

Answer A

Question 11: Jayne, Will and Lesley work as auditors for a client called TV Co and Jayne is
the senior auditors. TV Co manufactures large expensive televisions. The director of TV Co
offer Jayne one of the newest and most expensive televisions as a thank you gift for doing the
audit. If Jayne accepts the television, which one of the fundamental principles may be
threatened?

A. Professional competence
B. Confidentiality
C. Objectivity
D. Reliability

Answer C

Question 12: Reasons for accountants to behave ethically

A. Ethical issues may be a matter of law and regulation and accountants are expected to
apply them.
B. The professional requires members to conduct themselves and provide services to the
public according to certain standards. By upholding these standards, the profession’s
reputation and standing is protected.
C. An accountant’s ethical behavior serves to protect the public interest: clients;
governments, investors, employees, employers, credit providers
D. . All of the answers are right

Answer D

Question 13: Social responsibility is described:

A. Accountants have a public duty as well as a duty to their employer or client. Audit
work, accountancy work and investment decisions may all affect the public in some
way.
B. You must be able to complete your work without bias or prejudice and you must also
be seen to be independent.
C. You should question information given to you so that you form your own opinion
regarding its quality and reliability.
D. You should recognize that you are accountable for your own judgments and decisions.

Answer A

Question 14: Which of the following is fundamental ethical principle ?

A. Accountability
B. Social responsibility
 C. Professional behavior
D. Courtesy
Answer C

1. Which approach does IFRS use?

A. principles-based
B. rules-based
C. Both a & b correct
D. Both a & b incorrect
Answer: A
2. What is an example of advocacy threat?
A. The audit team is preparing to conduct its 2020 audit for ABC Company. However,
the audit team has not received its audit fees from ABC Company for its 2019 audit.
B. The auditor prepares the financial statements for ABC Company while also serving
as the auditor for ABC Company.
C. The auditor is assisting in selling ABC Company while also serving as the auditor
for the company.
D. ABC Company has been audited by the same auditor for over 10 years and the
auditor regularly plays golf with the CEO and CFO of ABC Company.
Answer: C
3) Choose the wrong sentence about profession and professionalism:
A. Profession is a body of theory and knowledge which is used to support the public
interest.
B. Professionalism is the conduct, behavior and attitude of someone in a work or
business environment.
C. Discretion is an example of profession
D. Professional is a person who belongs to a profession
Answer: C
4) The public interest should be disclosed or not?
A. Disclosed
B. Not disclosed
C. Both, it's up to situation
D. Always disclosed to protect the interest of people
Answer: C
5. Which of the following are stated fundamental principles of the IFAC Code?
A. Integrity, Objectivity, Confidentiality, Professional behavior, Competence
B. Integrity, Objectivity, Independence, Confidentiality, Competence
C. Integrity, Independence, Competence, Confidentiality, Professional behavior
D. Integrity, Objectivity, Courtesy, Independence, Competence
Answer: A
6. Which type of threat might arise in this situation ABC Company has been audited
by the same auditor for over 10 years and the auditor regularly plays golf with the
CEO and CFO of ABC Company.
A. Self-interest B. Advocacy C. Familiarity D.
Intimidation
Answer: C
7. “Members should be straighforward and honest in all professional/ business
relationships” is described which fundametal ethical principle?
A. Competence
B. Objectivity
C. Integrity
D. Professional behavior
Answer: C
8. Which of the following is the accountancy profession's public :
A. Clients
B. Employees
C. Employers
D. All of the above
Answer: D
9. To be effective, the code must have
A. Participation from all groups as the code is formed
B. The code can be imposed without communication to explain what it is trying to
achieved.
C. Don’t disciplinary actions for breach of the code
D. Some codes are written, launched and then forgotten as it is now ‘in place’.
Answer: A
10. Which of the following is Ethics in Accounting Real-life scenario?
A. Pressures to hit deadlines and ‘adjust things’ if necessary
B. Pressures from the clients to be creative with classification to minimise tax
C. Offers of financial incentives to make certain ‘favourable’ decisions
D. All of the above
Answer: D

QUESTION CHAPTER 3: Ethical decision making

1. Which factors will the actual moral decision taken depend on? Choose the best correct
answer.
A. Individual and situational factors
B. Individual and organization
C. Professional and organization
D. Professional and society
Correct answer: A. Individual and situational factors
2. How many questions related to American Accounting Association Model?
A.5
B. 6
C. 7
D. 8
Correct answer: C. 7
3.Which of the following best describe the norms that guide employees, implicitly more
often than not, to behave in ways that the firm values and finds worthy?
A. Organizational culture
B. Government’s financial regulations
C. Industrial norms
D. Legal statutes
Correct answer: A. Organizational culture
4.Which of the following statements is true about ethical decision making in business?
A. Ethical decision making is limited to the type of major corporate decisions with social
consequences.
B. At some point, every worker will be faced with an issue that will require ethical decision
making.
 C. All ethical decisions can be covered by economic, legal, or company rules and
regulations.
D. Ethical decision making should not rely on the personal values and principles of the
individuals involved.
Correct answer: D. Ethical decision making should not rely on the personal values
and principles of the individuals involved.
5. Individual factor that inluencing moral decising, except:
A. Gender
B. Professional
C. Age
D. Locus of control.
Correct answer: B. Professional
6. What step is the first in 4-stage process of ethical decision making:
A. Engage in moral behavior
B. Recognise moral issue
C. Establish moral intent
D. Make moral judgement
Correct answer: B. Recognise moral issue
7. What is the definition of ethics:
A. A set of classroom laws
B. Telling the truth 55% of the time
C. A set of moral principles
D. A set of criminal laws
Correct answer: C. A set of moral principles
8. A Buyer is on vacation and while checking the mail, finds an expensive gift from a vendor
addressed to them. The Buyer should:
A. Return the gift
B. Keep the gift, since it was sent to their home rather than the corporate office
C. Bring it to the SVP, Internal Audit, Safety & Security
D. Either A or C is correct
Correct answer: C. Bring it to the SVP, Internal Audit, Safety & Security
9. The context of ethical issue includes the following factors:
A. Concentration of effect, proximity
B. Bureaucracy, organizational group norms and culture
C. Authority, magnitude of consequence
D. Social consensus, national and culture context
Correct answer: B. Bureaucracy, organizational group norms and culture
10. Which stage of ethical decision making process where individuals learn how to integrate
and apply ethics knowledge, sensitivity to derive at a reasoned and well informed decision?
A. Establish moral intent
B. Recognise moral issue
C. Engage in moral behaviour
D. Make moral judgement
Correct answer: D. Make moral judgement
11. Which of the following is true about a person who believes in internal control?
A. Viewing themselves as masters of their destinies
B. Believing that the events in their lives are due to uncontrollable forces
C. What they want to achieve depends on luck, chance and powerful people
D. Seeing themselves as going with the flow because that’s all they can do
Correct answer: A. Viewing themselves as masters of their destinies

chapter 4
A primary objective of corporate governance is to
a. determine and control the strategic direction of an organization, so that the top
executives
are focused on maximizing corporate profits.
b. ensure that the interests of top-level managers are aligned with the interests of
shareholders.
c. lobby legislators to pass laws that are aligned with the organization’s interests.
d. resolve conflicts among corporate employees.
ANS: B
A primary objective of corporate governance is to
a. determine and control the strategic direction of an organization, so that the top
executives
are focused on maximizing corporate profits.
b. ensure that the interests of top-level managers are aligned with the interests of
shareholders.
c. lobby legislators to pass laws that are aligned with the organization’s interests.
d. resolve conflicts among corporate employees.
ANS: B
A primary objective of corporate governance is to
a. determine and control the strategic direction of an organization, so that the top
executives
are focused on maximizing corporate profits.
b. ensure that the interests of top-level managers are aligned with the interests of
shareholders.
c. lobby legislators to pass laws that are aligned with the organization’s interests.
d. resolve conflicts among corporate employees.
ANS: B
olders.
c. lobby legislators to pass
olders.
c. lobby legislators to pass

Chapter 4: CORPORATE GOVERNANCE

Group 8

Question 1: A primary objective of corporate governance is to

A. Determine and control the strategic direction of an organization, so that the top
executives are focused on maximizing corporate profits.

B. Ensure that the interests of top-level managers are aligned with the interests of
shareholders.

C. Lobby legislators to pass laws that are aligned with the organization’s interests.

D. Resolve conflicts among corporate employees.

⇨ Answer: B

Question 2: Complete the following: In small firms, managers often own a ____
percentage of the firm, which means there is ____ separation between ownership
and managerial control.

A. small; small
 B. small; large
C. large; small
D. large; large

⇨ Answer: C

Question 3: The separation between firm ownership and management creates

a(n) ____ relationship.

A. Governance
B. Control
C. Agency
D. Dependent

⇨ Answer: C

Question 4: ___________ is (are) frequently blamed for high CEO pay during
periods where corporate performance has been poor.

A. poor hiring practices

B. greedy CEOs
C. lazy stockholders
D. inadequate corporate governance

⇨ Answer: D

Question 5: In the U.S., a firm’s key stakeholder(s) is(are) the

A. government.
B. executives.
C. shareholders.
D. customers.

⇨ Answer: C

Question 6: Amos Ball, Inc., is a printing company in Iowa that has been family
owned and managed for three generations. Which of the following statements is
most likely to be TRUE?

A. Agency costs at Amos Ball are high.

 B. If research findings are valid, Amos Ball, Inc., will perform better if a family
member is CEO than if an outsider is CEO.
C. At Amos Ball, the opportunity for managerial opportunism is high.
D. The functions of risk-bearing and decision-making are separate at Amos Ball.

⇨ Answer: B

Question 7: An agency relationship exists when one party delegates

A. decision making responsibility to a second party.

B. financial responsibility to employees.
C. strategy implementation actions to functional managers.
D. ownership of a company to a second party.

⇨ Answer: A

Question 8: Which of the following is NOT an internal governance mechanism?

A. the board of directors

B. ownership concentration
C. executive compensation
D. the market for corporate control

⇨ Answer: D

Question 9: In contrast to managers’ desires, shareholders usually prefer that

free cash flows be

A. used to diversify the firm.

B. returned to them as dividends.
C. used to reduce corporate debt.
D. re-invested in additional corporate assets.

⇨ Answer: B

Question 10: Agency costs reflect all of the following EXCEPT ____ costs.

A. monitoring
B. enforcement
C. opportunity
D. incentive

⇨ Answer: C
Chapter 5: Boad of directors and related issues
Question 1: What are the main roles of non- executive directors?
A risk role, scrutinizing role, people role and risk role
B risk role, audit role, remuneration role, nomination role
C risk role, scrutinizing role, remuneration role, nomination role
D risk role, audit role, people role and risk role
Answer A
Question 2: What is the disadvantage of NEDs?
A lack of knowledge relating to company, industry
B insufficient time with the company
C Accepting the view of executive directors
D A, B, C are correct
Answer D
Question 3: Which of the following is not a responsibility of audit committees?
A. Monitoring management.
B. Relations with the independent auditor.
C. Management compensation.
D. Reviewing corporate reporting processes.
Answer: C
Question 4: In a two-tier structure of corporate governance:
A. Members of the supervisory board are appointed by the executive board.
B. The chair of the non-executive board is also chair of the executive board.
C. Non-executives are responsible for the day-to-day operraions.
D. CEO and chair of the board are split.
Answer: D

Question 5: Which report is developed from Higgs report?

A. Tyson report
B. Cadbury report
C. Financial Reporting Council (2010)
D. All of the above
Answer: A
Question 6: Which of the following is/are the requirement(s) for a BOD meeting?
A. Meeting should be regular and attendance expected
B. Have supportive information
C. Strike a balance between short-term and long-term issues
D. All of the above
Answer: D
Question 7: According to the cadbury report, which case would not violates
independence when the CEO is appointed Chairman?
A. He used to be CEO 6 years ago
B. He used to be CEO 5 years ago
C. He used to be CEO 4 years ago
D. He used to be CEO 3 years ago
Answer : A
Question 8: The overall responsibility of the CEO is to:
a. Take responsibility for the performance of the company, as determined by the
board's strategy and report to the chairman and/or board of directors.
b. Ensure that the board sets and implements the company's direction and strategy
effectively
c. Act as the company's lead representative, explaining aims and policies to the
shareholders.
d. All of them
Answer: A
Question 9: The induction process should give the incoming director:
a. an understanding of the nature of the company, its business and the markets in
which it operates
b. a link with the company's people
c. an understanding of the company's main relationships
d. all of them
answer: D
Question 10 : Performance evaluation: chairman and NEDs include:
A. Relationship, Leader ship and Communication
B. Relationship, Leader ship and Effectiveness
C. Relationship, Leader ship and contribution
D. Relationship, Leader ship and response
Answer: A

Case 5: WorldCom

1.What is WorldCom’s business ?

A. Shipping
B. Long Distance Discount Service
C. Energy-trading and Utilities
D. Biopharmaceutical
Answer : B

2. Which of the following fundamental ethical principles of WorldCom’ s CEO

violated ?
A. Professional competence and due care
B. Objectivity
C. Integrity
D. All of the above are true
Answer : D

3.What is the difference between shareholders and investors ?

A.Shareholders participate in operating the company and investors do not
participate in operating the company.
B.Neither shareholders nor investors participate in operating the company
C.Both shareholders and investors participate in running the company.
D.All answers are wrong
Answer : A.

4.Who is the CFO of Worldcom when accounting fraud occurs?

A. Bernard Ebbers.
B. Scott Sullivan.
C.David Myers.
D.Jack Grubman.
Answer : B

5.How did World Com cook its books?

A.World Com cook its books by treating routine expenses as capital
investments.
B.World Com cook its books by changing the quantity of goods.
C. World Com cook its books by reporting wrong capital.
D. World Com cook its books by recording more customers.
Answer: A

6.When did Worldcom file for bankruptcy?

A. June 25, 2002
B. September 23, 2002
C. July 21, 2002
D. March 21, 2002
Answer: C

7. When đi WorldCom change the this name ?

A. 1985
B. 1995
C. 1997
D. 2000
Answer : B

8. How did WoldCom cook this book ?

A. Cooking the books involves manipulating financial data to inflate the
company's earnings and increase its expenses in order to pump up its bottom
line.
B. Cooking the books involves manipulating financial data to inflate the
company's earnings and deflate its expenses in order to pump up its bottom line.
C. Cooking the books not involves manipulating financial data to inflate the
company's earnings pump up its bottom line.
D. Cooking the books not involves manipulating financial data to inflate the
company's earnings and increase its expenses in order to pump up its bottom
line.
Answer : B
 CASE STUDY 7: SAMUEL WAKSAL AND IMCLONE

1. What is the company type of Imclone systems?

A. A technology company.
B. A biotechnology company, specializing in manufacturing anti-cancer
drugs.
C. A service company.
D. A manufacturing company, specializing in manufacturing consumer
goods.
Answer: B
Explain: ImClone is a biotechnology company, is a star of Wall Street.
Is an American pharmaceutical company specializing in manufacturing
anti-cancer drugs.

2. What is the case of Samuel Waksal and Imclone systems related to

unethical?
A. Insider trading
B. Illegal business
C. Corruption
D. Fraud to customers
Answer: A
Explain: Samuel Waksal knowingly participated in insider trading
which involved selling his ImClone stock and then notifying his family of
the impending refusal by the FDA for the approval of their first drug
Erbitux. Waksal was privy to non-public information which he knew
would negatively impact the value of ImClone stock.
3. How much did Bristol-Myers Squibb pay for marketing rights to Erbitux
and co-promoting Erbitux with ImClone?
A. $1 billion
B. $2 billion
C. $3 billion
D. $4 billion
Answer: B
 Explain: On September 19, 2001, ImClone announced that Bristol-
Myers Squibb had paid $2 billion for the marketing rights to Erbitux and
co-promote Erbitux with ImClone

4. ImClone made a test shortcut, using what is called single armed study.
So what is a single armed study?
A. A study done with full steps.
B. A study was conducted with tightly controlled groups.
C. A study was conducted without a control group.
D. A study done by the FDA.
Answer: C
Explain: ImClone was one of at least five pharmaceutical companies
with EGFR drugs in mid-to late-stage testing. The winners at
commercialization of a new drug class such as EGFR are the “companies
that beat their rivals to market, since doctors tend to embrace the initial
entries”. Under this pressure, ImClone took a testing shortcut, using
what is known as a single-armed study-one which is conducted without
a control group.

5. Why were Samule Waksal’s actions unethical?

A. Waksal purchased put option contracts
B. Waksal sold put option contracts
C. Waksal did insider trading
D. All the answers above
Answer: C
Explain: Insider trading is the purchase or sale of securities by a
public company by someone who has confidential, important
information about the stock. Waksal made insider trading, an illegal
transactional act.
As for buying and selling options, the protection of your assets is legal
and does not violate professional ethics.

6. What is an option contract?

 A. An options contract is an agreement between a buyer and seller that
gives the purchaser of the option the right to buy or sell a particular
asset at a later date at an agreed upon price
B. Options contracts are often used in securities, commodities, and real
estate transactions
C. An option contract is a type of contract that protects an offeree from
an offeror's ability to revoke their offer to engage in a contract.
D. All the answers above
Answer: D
Explain: An option contract is an agreement in which investors
participating in the contract have the right to buy or sell assets at a
predetermined price, which may occur before or at a certain time.
Although this concept may seem like a futures contract, investors who
buy option contracts are not obligated to carry out their positions.
Options contracts are derivative financial instruments that can be based
on a variety of underlying assets including stocks and cryptocurrencies.
These contracts may also be derived from financial indices. Option
contracts are often used to hedge risks that may occur in current
positions and to carry out speculative trading.

7. Who informed Samuel Waksal tha he had a basis for insider trading?
A. His father
B. His brother
C. His daughter
D. His Secrectory
Answer: B.
Explain: His Brother. Samuel’s brother contacted him on December
26th to inform of the impending FDA application refusal. Samuel Waksal
began relaying the information to family members. On the night of
December 26th, he apparently telephoned family members to alert
them that ImClone would be receiving this bad news.

8. Samuel’s insider trading is legal or illegal? Why?

A. Legal, because he bought back his own stock.
B. Legal, because the one who informed him was his brother.
 C. Illegal, because he made transaction when the information is not yet
published.
D. Illegal, because he is the CEO of that company.
Answer: C.
Explain: The more infamous form of insider trading is the illegal use of
non-public material information for profit. It's important to remember
this can be done by anyone including company executives, their friends,
and relatives, or just a regular person on the street, as long as the
information is not publicly known.

9. What did Samuel Waksal react when he knew the FDA would issue an
RTF letter?
A. He chose to sell all his holdings before the information was
published.
B. To persuade the FDA to approve for Erbitux.
C. Spend a lot of time on research and licensing of Erbitux again
D. He is researching and developing a new drug
Answer: A
Explain: On December 25, 2001, Bristol-Myers Squibb learned from a
source at the FDA that the FDA would issue a RTF letter on December 28,
2001. On the evening of December 26, 2001, Waksal learned of the
FDA's decision and attempted to sell 79,797 shares of ImClone stock that
were held in his brokerage account with Merrill Lynch.

10. What does FDA stand for?

A. Food and Agriculture Organization
B. Federal Bureau of Investigation
C. United States Food and Drug Administration
D. Federal Department  Agency
Answer: C
Explain: FDA (United States Food and Drug Administration): is an
agency within the U.S. Department of Health and Human Services (HHS)
that oversees the manufacturing and distribution of food,
pharmaceuticals, medical devices, tobacco and other consumer products
and veterinary medicine.
1. Which ones of the following actions would be considered gender
inequality?
A. Women miss out on employment opportunities because of their
gender
B. Equal opportunity of promotion.
C. Improving the workplace environment for women.
D. Women are paid less than male colleagues.
E. Introducing fair recruitment policies.
F. Women are overlooked for promotion although they have good
performance.
2. The reasons why financial industry is a male dominated, except:
A. Climate in Wall Street firms
B. The reccesion
C. Government regulations
D. Gender pay gap
3. Why does sex discrimination seem to persist on Wall Street?
A. There is an Insurance Policy for Sexual Harassment.
B. The cost of lawsuits is pretty small for the company.
C. Wall Street firms doesn't seem to be making attempts to change
their culture.
D. All of the above are correct.
4. How to create a safe working environment for women?
A. There should be a method in place for reporting.
B. Hiring more women in leadership positions and creating a civil,
respectful culture for all employees.
C. When a sex discrimination claim is made, it needs to be
investigated and action against an offending party.
D. All of the above are correct.
5. ………… is a point after which you cannot go any further, usually
in improving your position at work. When people refer to a ………,
they are talking about the attitudes and traditions in a society that
prevent women from rising to the top jobs.
Choose the correct answer to complete the statement:
A. Barrier
B. Glass Ceiling
C. Wooden Ceiling
D. Gender force
6. What is a feminist?
A. Someone who believes men are better than women
B. Someone who believe women are better than men
 C. Someone who believes men and women are equal
D. A woman
7. Which of the following allows employees to sue for monetary
damages in cases of intentional discrimination, including
compensatory and punitive damages?
A. Civil Rights Act of 1991
B. Civil Rights Act of 1997
C. Initiative Statute 1991
D. Antideficiency Act
8. Which of the following statements about EEOC is true?
A. It protects workers from retaliation if they refuse to do work that
they reasonably believe might cause serious injury
B. It prohibits employers from using lie detector tests on employees
unless the employers is engaged in an investigation of economic
losses due to theft
C. It objects to mandatory binding arbitration as a condition of
employment because it denies employees the right to bring
independent discrimination claims
D. It provides skilled people to help unions and employers in their
bargaining so as to prevent strikes.
9. The organization in the US that is responsible for making sure
companies do not treat anyone unfairly because of their sex, race,
religion, etc…
Which organization was mentioned in this statement ?
A. Equal Employment Opportunity Commission.
B. Equal Employment Opportunity Center
C. Earth Environment Observation Committee
D. Equal Employment Opportunity Council

Chapter 1: Overview of professional ethics:

Question 1: The difference between Morals and Ethics

A. Ethics may differ from society to society; Morals are generally uniform

B. Ethics response to a specific situation; Morals are general principles set by group

C. Morals have applicability in business, Ethics is no

D. A & B are correct

Answer B

Question 2: Four steps towards understanding professional ethic

A. Ethics -> Morals -> Business Ethics -> Professional Ethics

B. Ethics -> Morals -> Professional Ethics -> Business Ethics

C. Morals -> Ethics -> Professional Ethics -> Business Ethics

D. Morals -> Ethics -> Business Ethics -> Professional Ethics

Answer D

Question 3: How can accountants demonstrates accountability?

A. By questioning work given to them

B. By taking responsibility for a mistake

C. By ensuring their work is free from error

D. By replying to an email on behalf of an unavailable colleagues

Answer B

Question 4: The following statement is true?

A. Professional accountants are expected to have regard to the public interest in performing
their duties

B. Ethical values describe what the entity does, not how it does business

C. The professional accountant is not bound by the principles of confidentiality after the end
of the relationship with a client or employer

D. The five qualities and virtues sought by CIMA are reliability, accountability, fairness,
responsibility, and timeless.

Answer A

Question 5: Which three of the following allow accountants to demonstrate the

professional quality of skepticism?

A. By keeping their mind free from distractions

B. By seeking supporting evidence before accepting information is accurate

C. By being straightforward and honest at all times

D. All of the answers are right.

Answer B

Question 6: Which of the following statements best describes corporate responsibility?

A. The company must appear ethically in all its marketing materials

B. The company must put the needs of the community, its shareholders and employees at the
heart of all its decisions

C. The company develops policies on issues such as how to support the local community and
charities to ensure it plays a positive role in its local area

D. The company must develop relationships with its stakeholders so it can learn from them
and meet their needs in a more efficient and environmentally friendly way

Answer B

Question 7: Under which circumstance might an accountant have to disclose

confidential information give to them?

A. When requested by a regulator

B. When requested by a lawyer

C. When requested by a fellow employee or client

D. When requested by an employer

Answer A

Question 8: Which three of the following explain why the principle of integrity is
important?

A. To prevent passing on misinformation

B. To enhance the credibility of an accountant’s work

C. To ensure straightforward and honest dealings

D. All of the answers are right.

Answer D
Question 9: Which statement describes the principle of objectivity that is set out by the
UK government?

A. By following this principle, an accountant minimizes the risk of passing on incorrect

information.

B. Following this principle requires an accountant to keep their mind free from bias.

C. Following this principle requires an accountant to stay technically up to date.

D. Following this principle requires scepticism and close attention to detail when reviewing
information

Answer B

Question 10: Which of the following are included in the seven principles of public life
that is set out by the UK government?

A. Selflessness

B. Boldness

C. Leadership

D. Obedience

Answer A

Question 11: Jayne, Will and Lesley work as auditors for a client called TV Co and Jayne is
the senior auditors. TV Co manufactures large expensive televisions. The director of TV Co
offer Jayne one of the newest and most expensive televisions as a thank you gift for doing the
audit. If Jayne accepts the television, which one of the fundamental principles may be
threatened?

A. Professional competence
B. Confidentiality
C. Objectivity
D. Reliability

Answer C

Question 12: Reasons for accountants to behave ethically

A. Ethical issues may be a matter of law and regulation and accountants are expected to
apply them.
B. The professional requires members to conduct themselves and provide services to the
public according to certain standards. By upholding these standards, the profession’s
reputation and standing is protected.
C. An accountant’s ethical behavior serves to protect the public interest: clients;
governments, investors, employees, employers, credit providers
D. . All of the answers are right

Answer D

Question 13: Social responsibility is described:

A. Accountants have a public duty as well as a duty to their employer or client. Audit
work, accountancy work and investment decisions may all affect the public in some
way.
B. You must be able to complete your work without bias or prejudice and you must also
be seen to be independent.
C. You should question information given to you so that you form your own opinion
regarding its quality and reliability.
D. You should recognize that you are accountable for your own judgments and decisions.

Answer A

Question 14: Which of the following is fundamental ethical principle ?

A. Accountability
B. Social responsibility
C. Professional behavior
D. Courtesy
Answer C

1. Which approach does IFRS use?

A. principles-based
B. rules-based
C. Both a & b correct
D. Both a & b incorrect
Answer: A
2. What is an example of advocacy threat?
A. The audit team is preparing to conduct its 2020 audit for ABC Company. However,
the audit team has not received its audit fees from ABC Company for its 2019 audit.
B. The auditor prepares the financial statements for ABC Company while also serving
as the auditor for ABC Company.
C. The auditor is assisting in selling ABC Company while also serving as the auditor
for the company.
D. ABC Company has been audited by the same auditor for over 10 years and the
auditor regularly plays golf with the CEO and CFO of ABC Company.
Answer: C
3) Choose the wrong sentence about profession and professionalism:
A. Profession is a body of theory and knowledge which is used to support the public
interest.
B. Professionalism is the conduct, behavior and attitude of someone in a work or
business environment.
C. Discretion is an example of profession
D. Professional is a person who belongs to a profession
Answer: C
4) The public interest should be disclosed or not?
A. Disclosed
B. Not disclosed
C. Both, it's up to situation
D. Always disclosed to protect the interest of people
Answer: C
5. Which of the following are stated fundamental principles of the IFAC Code?
A. Integrity, Objectivity, Confidentiality, Professional behavior, Competence
B. Integrity, Objectivity, Independence, Confidentiality, Competence
C. Integrity, Independence, Competence, Confidentiality, Professional behavior
D. Integrity, Objectivity, Courtesy, Independence, Competence
Answer: A
6. Which type of threat might arise in this situation ABC Company has been audited
by the same auditor for over 10 years and the auditor regularly plays golf with the
CEO and CFO of ABC Company.
A. Self-interest B. Advocacy C. Familiarity D.
Intimidation
Answer: C
7. “Members should be straighforward and honest in all professional/ business
relationships” is described which fundametal ethical principle?
A. Competence
B. Objectivity
C. Integrity
D. Professional behavior
Answer: C
8. Which of the following is the accountancy profession's public :
A. Clients
B. Employees
C. Employers
D. All of the above
Answer: D
9. To be effective, the code must have
A. Participation from all groups as the code is formed
B. The code can be imposed without communication to explain what it is trying to
achieved.
C. Don’t disciplinary actions for breach of the code
D. Some codes are written, launched and then forgotten as it is now ‘in place’.
Answer: A
10. Which of the following is Ethics in Accounting Real-life scenario?
A. Pressures to hit deadlines and ‘adjust things’ if necessary
B. Pressures from the clients to be creative with classification to minimise tax
C. Offers of financial incentives to make certain ‘favourable’ decisions
D. All of the above
Answer: D

QUESTION CHAPTER 3: Ethical decision making

1. Which factors will the actual moral decision taken depend on? Choose the best correct
answer.
A. Individual and situational factors
B. Individual and organization
C. Professional and organization
D. Professional and society
Correct answer: A. Individual and situational factors
2. How many questions related to American Accounting Association Model?
A.5
B. 6
C. 7
D. 8
Correct answer: C. 7
3.Which of the following best describe the norms that guide employees, implicitly more
often than not, to behave in ways that the firm values and finds worthy?
A. Organizational culture
B. Government’s financial regulations
C. Industrial norms
D. Legal statutes
Correct answer: A. Organizational culture
4.Which of the following statements is true about ethical decision making in business?
A. Ethical decision making is limited to the type of major corporate decisions with social
consequences.
B. At some point, every worker will be faced with an issue that will require ethical decision
making.
C. All ethical decisions can be covered by economic, legal, or company rules and
regulations.
D. Ethical decision making should not rely on the personal values and principles of the
individuals involved.
Correct answer: D. Ethical decision making should not rely on the personal values
and principles of the individuals involved.
5. Individual factor that inluencing moral decising, except:
A. Gender
B. Professional
C. Age
D. Locus of control.
Correct answer: B. Professional
6. What step is the first in 4-stage process of ethical decision making:
A. Engage in moral behavior
B. Recognise moral issue
C. Establish moral intent
D. Make moral judgement
Correct answer: B. Recognise moral issue
7. What is the definition of ethics:
A. A set of classroom laws
B. Telling the truth 55% of the time
C. A set of moral principles
D. A set of criminal laws
Correct answer: C. A set of moral principles
8. A Buyer is on vacation and while checking the mail, finds an expensive gift from a vendor
addressed to them. The Buyer should:
A. Return the gift
B. Keep the gift, since it was sent to their home rather than the corporate office
C. Bring it to the SVP, Internal Audit, Safety & Security
D. Either A or C is correct
Correct answer: C. Bring it to the SVP, Internal Audit, Safety & Security
9. The context of ethical issue includes the following factors:
A. Concentration of effect, proximity
B. Bureaucracy, organizational group norms and culture
C. Authority, magnitude of consequence
D. Social consensus, national and culture context
Correct answer: B. Bureaucracy, organizational group norms and culture
10. Which stage of ethical decision making process where individuals learn how to integrate
and apply ethics knowledge, sensitivity to derive at a reasoned and well informed decision?
A. Establish moral intent
B. Recognise moral issue
C. Engage in moral behaviour
D. Make moral judgement
Correct answer: D. Make moral judgement
11. Which of the following is true about a person who believes in internal control?
A. Viewing themselves as masters of their destinies
B. Believing that the events in their lives are due to uncontrollable forces
C. What they want to achieve depends on luck, chance and powerful people
D. Seeing themselves as going with the flow because that’s all they can do
Correct answer: A. Viewing themselves as masters of their destinies

chapter 4
A primary objective of corporate governance is to
a. determine and control the strategic direction of an organization, so that the top
executives
are focused on maximizing corporate profits.
b. ensure that the interests of top-level managers are aligned with the interests of
shareholders.
c. lobby legislators to pass laws that are aligned with the organization’s interests.
d. resolve conflicts among corporate employees.
ANS: B
A primary objective of corporate governance is to
a. determine and control the strategic direction of an organization, so that the top
executives
are focused on maximizing corporate profits.
b. ensure that the interests of top-level managers are aligned with the interests of
shareholders.
c. lobby legislators to pass laws that are aligned with the organization’s interests.
d. resolve conflicts among corporate employees.
ANS: B
A primary objective of corporate governance is to
a. determine and control the strategic direction of an organization, so that the top
executives
are focused on maximizing corporate profits.
b. ensure that the interests of top-level managers are aligned with the interests of
shareholders.
c. lobby legislators to pass laws that are aligned with the organization’s interests.
d. resolve conflicts among corporate employees.
ANS: B
olders.
c. lobby legislators to pass
olders.
c. lobby legislators to pass

Chapter 4: CORPORATE GOVERNANCE

Group 8

Question 1: A primary objective of corporate governance is to

A. Determine and control the strategic direction of an organization, so that the top
executives are focused on maximizing corporate profits.

B. Ensure that the interests of top-level managers are aligned with the interests of
shareholders.

C. Lobby legislators to pass laws that are aligned with the organization’s interests.

D. Resolve conflicts among corporate employees.

⇨ Answer: B

Question 2: Complete the following: In small firms, managers often own a ____
percentage of the firm, which means there is ____ separation between ownership
and managerial control.

A. small; small
B. small; large
C. large; small
D. large; large

⇨ Answer: C

Question 3: The separation between firm ownership and management creates

a(n) ____ relationship.
 A. Governance
B. Control
C. Agency
D. Dependent

⇨ Answer: C

Question 4: ___________ is (are) frequently blamed for high CEO pay during
periods where corporate performance has been poor.

A. poor hiring practices

B. greedy CEOs
C. lazy stockholders
D. inadequate corporate governance

⇨ Answer: D

Question 5: In the U.S., a firm’s key stakeholder(s) is(are) the

A. government.
B. executives.
C. shareholders.
D. customers.

⇨ Answer: C

Question 6: Amos Ball, Inc., is a printing company in Iowa that has been family
owned and managed for three generations. Which of the following statements is
most likely to be TRUE?

A. Agency costs at Amos Ball are high.

B. If research findings are valid, Amos Ball, Inc., will perform better if a family
member is CEO than if an outsider is CEO.
C. At Amos Ball, the opportunity for managerial opportunism is high.
D. The functions of risk-bearing and decision-making are separate at Amos Ball.

⇨ Answer: B

Question 7: An agency relationship exists when one party delegates

A. decision making responsibility to a second party.

 B. financial responsibility to employees.
C. strategy implementation actions to functional managers.
D. ownership of a company to a second party.

⇨ Answer: A

Question 8: Which of the following is NOT an internal governance mechanism?

A. the board of directors

B. ownership concentration
C. executive compensation
D. the market for corporate control

⇨ Answer: D

Question 9: In contrast to managers’ desires, shareholders usually prefer that

free cash flows be

A. used to diversify the firm.

B. returned to them as dividends.
C. used to reduce corporate debt.
D. re-invested in additional corporate assets.

⇨ Answer: B

Question 10: Agency costs reflect all of the following EXCEPT ____ costs.

A. monitoring
B. enforcement
C. opportunity
D. incentive

⇨ Answer: C

Chapter 5: Boad of directors and related issues

Question 1: What are the main roles of non- executive directors?
A risk role, scrutinizing role, people role and risk role
B risk role, audit role, remuneration role, nomination role
C risk role, scrutinizing role, remuneration role, nomination role
D risk role, audit role, people role and risk role
Answer A
Question 2: What is the disadvantage of NEDs?
A lack of knowledge relating to company, industry
B insufficient time with the company
C Accepting the view of executive directors
D A, B, C are correct
Answer D
Question 3: Which of the following is not a responsibility of audit committees?
A. Monitoring management.
B. Relations with the independent auditor.
C. Management compensation.
D. Reviewing corporate reporting processes.
Answer: C
Question 4: In a two-tier structure of corporate governance:
A. Members of the supervisory board are appointed by the executive board.
B. The chair of the non-executive board is also chair of the executive board.
C. Non-executives are responsible for the day-to-day operraions.
D. CEO and chair of the board are split.
Answer: D

Question 5: Which report is developed from Higgs report?

A. Tyson report
B. Cadbury report
C. Financial Reporting Council (2010)
D. All of the above
Answer: A
Question 6: Which of the following is/are the requirement(s) for a BOD meeting?
A. Meeting should be regular and attendance expected
B. Have supportive information
C. Strike a balance between short-term and long-term issues
D. All of the above
Answer: D
Question 7: According to the cadbury report, which case would not violates
independence when the CEO is appointed Chairman?
A. He used to be CEO 6 years ago
B. He used to be CEO 5 years ago
C. He used to be CEO 4 years ago
D. He used to be CEO 3 years ago
Answer : A
Question 8: The overall responsibility of the CEO is to:
a. Take responsibility for the performance of the company, as determined by the
board's strategy and report to the chairman and/or board of directors.
b. Ensure that the board sets and implements the company's direction and strategy
effectively
c. Act as the company's lead representative, explaining aims and policies to the
shareholders.
d. All of them
Answer: A
Question 9: The induction process should give the incoming director:
a. an understanding of the nature of the company, its business and the markets in
which it operates
b. a link with the company's people
c. an understanding of the company's main relationships
d. all of them
answer: D
Question 10 : Performance evaluation: chairman and NEDs include:
A. Relationship, Leader ship and Communication
B. Relationship, Leader ship and Effectiveness
C. Relationship, Leader ship and contribution
D. Relationship, Leader ship and response
Answer: A

Case 5: WorldCom

1.What is WorldCom’s business ?

A. Shipping
B. Long Distance Discount Service
C. Energy-trading and Utilities
D. Biopharmaceutical
Answer : B

2. Which of the following fundamental ethical principles of WorldCom’ s CEO

violated ?
A. Professional competence and due care
B. Objectivity
C. Integrity
D. All of the above are true
Answer : D

3.What is the difference between shareholders and investors ?

A.Shareholders participate in operating the company and investors do not
participate in operating the company.
B.Neither shareholders nor investors participate in operating the company
C.Both shareholders and investors participate in running the company.
D.All answers are wrong
Answer : A.

4.Who is the CFO of Worldcom when accounting fraud occurs?

A. Bernard Ebbers.
B. Scott Sullivan.
C.David Myers.
D.Jack Grubman.
Answer : B

5.How did World Com cook its books?

A.World Com cook its books by treating routine expenses as capital
investments.
B.World Com cook its books by changing the quantity of goods.
C. World Com cook its books by reporting wrong capital.
D. World Com cook its books by recording more customers.
Answer: A

6.When did Worldcom file for bankruptcy?

A. June 25, 2002
B. September 23, 2002
C. July 21, 2002
D. March 21, 2002
Answer: C

7. When đi WorldCom change the this name ?

A. 1985
B. 1995
C. 1997
D. 2000
Answer : B

8. How did WoldCom cook this book ?

A. Cooking the books involves manipulating financial data to inflate the
company's earnings and increase its expenses in order to pump up its bottom
line.
B. Cooking the books involves manipulating financial data to inflate the
company's earnings and deflate its expenses in order to pump up its bottom line.
C. Cooking the books not involves manipulating financial data to inflate the
company's earnings pump up its bottom line.
D. Cooking the books not involves manipulating financial data to inflate the
company's earnings and increase its expenses in order to pump up its bottom
line.
Answer : B

CASE STUDY 7: SAMUEL WAKSAL AND IMCLONE

1. What is the company type of Imclone systems?

A. A technology company.
B. A biotechnology company, specializing in manufacturing anti-cancer
drugs.
C. A service company.
 D. A manufacturing company, specializing in manufacturing consumer
goods.
Answer: B
Explain: ImClone is a biotechnology company, is a star of Wall Street.
Is an American pharmaceutical company specializing in manufacturing
anti-cancer drugs.

2. What is the case of Samuel Waksal and Imclone systems related to

unethical?
A. Insider trading
B. Illegal business
C. Corruption
D. Fraud to customers
Answer: A
Explain: Samuel Waksal knowingly participated in insider trading
which involved selling his ImClone stock and then notifying his family of
the impending refusal by the FDA for the approval of their first drug
Erbitux. Waksal was privy to non-public information which he knew
would negatively impact the value of ImClone stock.
3. How much did Bristol-Myers Squibb pay for marketing rights to Erbitux
and co-promoting Erbitux with ImClone?
A. $1 billion
B. $2 billion
C. $3 billion
D. $4 billion
Answer: B
Explain: On September 19, 2001, ImClone announced that Bristol-
Myers Squibb had paid $2 billion for the marketing rights to Erbitux and
co-promote Erbitux with ImClone

4. ImClone made a test shortcut, using what is called single armed study.
So what is a single armed study?
A. A study done with full steps.
B. A study was conducted with tightly controlled groups.
 C. A study was conducted without a control group.
D. A study done by the FDA.
Answer: C
Explain: ImClone was one of at least five pharmaceutical companies
with EGFR drugs in mid-to late-stage testing. The winners at
commercialization of a new drug class such as EGFR are the “companies
that beat their rivals to market, since doctors tend to embrace the initial
entries”. Under this pressure, ImClone took a testing shortcut, using
what is known as a single-armed study-one which is conducted without
a control group.

5. Why were Samule Waksal’s actions unethical?

A. Waksal purchased put option contracts
B. Waksal sold put option contracts
C. Waksal did insider trading
D. All the answers above
Answer: C
Explain: Insider trading is the purchase or sale of securities by a
public company by someone who has confidential, important
information about the stock. Waksal made insider trading, an illegal
transactional act.
As for buying and selling options, the protection of your assets is legal
and does not violate professional ethics.

6. What is an option contract?

A. An options contract is an agreement between a buyer and seller that
gives the purchaser of the option the right to buy or sell a particular
asset at a later date at an agreed upon price
B. Options contracts are often used in securities, commodities, and real
estate transactions
C. An option contract is a type of contract that protects an offeree from
an offeror's ability to revoke their offer to engage in a contract.
D. All the answers above
 Answer: D
Explain: An option contract is an agreement in which investors
participating in the contract have the right to buy or sell assets at a
predetermined price, which may occur before or at a certain time.
Although this concept may seem like a futures contract, investors who
buy option contracts are not obligated to carry out their positions.
Options contracts are derivative financial instruments that can be based
on a variety of underlying assets including stocks and cryptocurrencies.
These contracts may also be derived from financial indices. Option
contracts are often used to hedge risks that may occur in current
positions and to carry out speculative trading.

7. Who informed Samuel Waksal tha he had a basis for insider trading?
A. His father
B. His brother
C. His daughter
D. His Secrectory
Answer: B.
Explain: His Brother. Samuel’s brother contacted him on December
26th to inform of the impending FDA application refusal. Samuel Waksal
began relaying the information to family members. On the night of
December 26th, he apparently telephoned family members to alert
them that ImClone would be receiving this bad news.

8. Samuel’s insider trading is legal or illegal? Why?

A. Legal, because he bought back his own stock.
B. Legal, because the one who informed him was his brother.
C. Illegal, because he made transaction when the information is not yet
published.
D. Illegal, because he is the CEO of that company.
Answer: C.
Explain: The more infamous form of insider trading is the illegal use of
non-public material information for profit. It's important to remember
this can be done by anyone including company executives, their friends,
 and relatives, or just a regular person on the street, as long as the
information is not publicly known.

9. What did Samuel Waksal react when he knew the FDA would issue an
RTF letter?
A. He chose to sell all his holdings before the information was
published.
B. To persuade the FDA to approve for Erbitux.
C. Spend a lot of time on research and licensing of Erbitux again
D. He is researching and developing a new drug
Answer: A
Explain: On December 25, 2001, Bristol-Myers Squibb learned from a
source at the FDA that the FDA would issue a RTF letter on December 28,
2001. On the evening of December 26, 2001, Waksal learned of the
FDA's decision and attempted to sell 79,797 shares of ImClone stock that
were held in his brokerage account with Merrill Lynch.

10. What does FDA stand for?

A. Food and Agriculture Organization
B. Federal Bureau of Investigation
C. United States Food and Drug Administration
D. Federal Department  Agency
Answer: C
Explain: FDA (United States Food and Drug Administration): is an
agency within the U.S. Department of Health and Human Services (HHS)
that oversees the manufacturing and distribution of food,
pharmaceuticals, medical devices, tobacco and other consumer products
and veterinary medicine.
1. Which ones of the following actions would be considered gender
inequality?
A. Women miss out on employment opportunities because of their
gender
B. Equal opportunity of promotion.
C. Improving the workplace environment for women.
D. Women are paid less than male colleagues.
E. Introducing fair recruitment policies.
 F. Women are overlooked for promotion although they have good
performance.
2. The reasons why financial industry is a male dominated, except:
A. Climate in Wall Street firms
B. The reccesion
C. Government regulations
D. Gender pay gap
3. Why does sex discrimination seem to persist on Wall Street?
A. There is an Insurance Policy for Sexual Harassment.
B. The cost of lawsuits is pretty small for the company.
C. Wall Street firms doesn't seem to be making attempts to change
their culture.
D. All of the above are correct.
4. How to create a safe working environment for women?
A. There should be a method in place for reporting.
B. Hiring more women in leadership positions and creating a civil,
respectful culture for all employees.
C. When a sex discrimination claim is made, it needs to be
investigated and action against an offending party.
D. All of the above are correct.
5. ………… is a point after which you cannot go any further, usually
in improving your position at work. When people refer to a ………,
they are talking about the attitudes and traditions in a society that
prevent women from rising to the top jobs.
Choose the correct answer to complete the statement:
A. Barrier
B. Glass Ceiling
C. Wooden Ceiling
D. Gender force
6. What is a feminist?
A. Someone who believes men are better than women
B. Someone who believe women are better than men
C. Someone who believes men and women are equal
D. A woman
7. Which of the following allows employees to sue for monetary
damages in cases of intentional discrimination, including
compensatory and punitive damages?
A. Civil Rights Act of 1991
B. Civil Rights Act of 1997
C. Initiative Statute 1991
 D. Antideficiency Act
8. Which of the following statements about EEOC is true?
A. It protects workers from retaliation if they refuse to do work that
they reasonably believe might cause serious injury
B. It prohibits employers from using lie detector tests on employees
unless the employers is engaged in an investigation of economic
losses due to theft
C. It objects to mandatory binding arbitration as a condition of
employment because it denies employees the right to bring
independent discrimination claims
D. It provides skilled people to help unions and employers in their
bargaining so as to prevent strikes.
9. The organization in the US that is responsible for making sure
companies do not treat anyone unfairly because of their sex, race,
religion, etc…
Which organization was mentioned in this statement ?
A. Equal Employment Opportunity Commission.
B. Equal Employment Opportunity Center
C. Earth Environment Observation Committee
D. Equal Employment Opportunity Council