JOSIE, AN ACCOUNTING SUPERVISOR IN MONK & SONS REALTY, INSTRUCTS MARIA ANSWER
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Course
Ethics
Institution
Ethics
1. Sarah, the controller of a large beverage supplier, supervises two employees. Her boss, Vladimir, instructs her to increase the company’s inventory balance for an amount that is material to the financial statements by crediting several small “miscellaneous” expense accounts. She does not u...
1. Sarah, the controller of a large beverage supplier, supervises two employees. Her boss, Vladimir,
instructs her to increase the company’s inventory balance for an amount that is material to the
financial statements by crediting several small “miscellaneous” expense accounts. She does not
understand why he wants her to make these entries but immediately directs one of her staff to
make them because she has been instructed to do so. Which of the following statements best
describes Sarah’s actions?
a. Sarah failed to evaluate a potential ethical cause
b. Sarah failed to refer the matter to the American Institute of Certified Public Accountants ethics
hotline
c. Sarah failed to ensure that her staff was competent to make the entries
d. Sarah failed to consider the rules of other regulators
ANSWER:
a. Sarah failed to evaluate a potential ethical cause
, 2. Josie, an accounting supervisor in Monk & Sons Realty, instructs Maria, her employee, to make
certain accounting entries in the company’s books that will increase revenue. Maria researches
the matter, confirming her concern that these entries would overstate revenue, and informs
Josie that recognizing revenue in this manner would be premature and not consistent with
generally accepted accounting principles (GAAP) but Josie disagrees and insists that Maria
record the entries. The amount of revenue is material to Monk’s financial statements. According
to the American Institute of Certified Public Accountants rules, what should Maria do first?
a. Resign her position quietly
b. Report the matter to the senior partner in the firm
c. Take out a professional liability policy
d. Discuss her concerns with Josie’s boss
ANSWER:
b. Report the matter to the senior partner in the firm
d. Discuss her concerns with Josie’s boss
,3. The American Institute of Certified Public Accountants Ethics Codification includes the following
sections: re-check the options. Whether only 1 option need to be selected or multiple options?
a. Preface, rules, and interpretations applicable to members in tax practice and rules and
interpretations applicable to members in business
b. Preface, rules, and interpretations applicable to members in public practice and rules and
interpretations applicable to members in business
c. Preface, rules, and interpretations applicable to members in tax practice and rules and
interpretations applicable to members in audit practice
d. Preface, rules, and interpretations applicable to members in audit practice and rules and
interpretations applicable to members in business
ANSWER:
b. Preface, rules, and interpretations applicable to members in public practice and rules and
interpretations applicable to members in business
, 4. Which phrase is used by the Code of Professional Conduct to describe integrity
a. Candid, within the constraints of client confidentiality
b. Forceful advocate of the client’s position
c. Valued business advisor to the client
d. Willing to subordinate judgment to achieve a proper outcome
a. Candid, within the constraints of client confidentiality
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