Chapter 3—Managing Ethical Business Concerns

MULTIPLE CHOICE

1. An ethical issue is a problem, situation, or opportunity

a. that has no correct answer.
b. that harms the environment.
c. requiring society as a whole to choose among several actions that must be evaluated as
right or wrong.
d. requiring an individual, group, or organization to choose among several actions that must
be evaluated as right or wrong, ethical or unethical.
e. requiring an individual, group, or organization to choose between harming consumers or
the environment and earning more profits.
ANS: D PTS: 1

2. Ethical issues in business typically arise because of conflicts between individuals' personal moral
philosophies and values and the
a. values and attitudes of the organization in which they work.
b. values and attitudes of the society in which they live.
c. values and attitudes of the organization in which they work and the society in which they
live.
d. laws and regulations of the country in which they live.
e. values and attitudes of their parents and religion.
ANS: C PTS: 1

3. _____ is an important element of virtue and means being whole, sound, and in unimpaired condition.
a. Optimization
b. Ethical issue
c. Honesty
d. Trust
e. Integrity
ANS: E PTS: 1

4. A court found an oil company guilty of placing profits over the safety and well-being of its employees.
This situation can be classified as
a. ethical.
b. unethical.
c. an ethical issue.
d. a dilemma.
e. a justice issue.
ANS: C PTS: 1

© 2013 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different
from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
5. A person uncomfortable with his employer's unspoken policy of hiring only white men is experiencing
a. a conflict of interest.
b. an ethical issue.
c. a feeling of guilt.
d. cognitive dissonance.
e. a moral attribute.
ANS: B PTS: 1

6. Issues related to fairness and honesty may arise because business is sometimes regarded as a
a. legal case, where everything must be done to the letter of the law.
b. contest, with the most ethical firm "winning."
c. guerilla war where anything goes in the fight for consumers' dollars.
d. game governed by its own rules rather than those of society.
e. game governed by the rules of society.
ANS: D PTS: 1

7. War metaphors are common in business. This kind of mindset can be dangerous for business leaders
because
a. it may lead executives to become violent.
b. it may foster the idea that honesty is unnecessary in business.
c. it may lead organizations to be excessively aggressive.
d. business is not like warfare and the metaphors are not appropriate.
e. business is more like a game than a war.
ANS: B PTS: 1

8. Conflicts of interest exist when employees must choose whether to

a. advance their own personal interests, those of the organization, or those of some other
group.
b. advance the interests of the organization or those of society.
c. accept bribes or not.
d. carry out an assignment they perceive to be unethical.
e. report an unethical coworker.
ANS: A PTS: 1

9. _____ is the offering of something of value in order to gain an illicit advantage.

a. Shoulder surfing
b. Hacking
c. Gift exchange
d. Conflicts of interest
e. Bribery
ANS: E PTS: 1

© 2013 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different
from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
10. Concerns involving copyright infringement on books, movies and music, and other illegally produced
goods relate to which type of ethical issue?
a. Conflict of interest
b. Honesty
c. Communications
d. Discrimination
e. Intellectual property rights
ANS: E PTS: 1

11. _____ is defined as any purposeful communication that deceives, manipulates, or conceals facts in
order to create a false impression.
a. Stealing
b. Lying
c. Fraud
d. Misappropriation
e. Accounting fraud
ANS: C PTS: 1

12. In marketing communications, lying causes predicaments for companies because it destroys
a. trust.
b. honor.
c. confidence.
d. integrity.
e. products.
ANS: A PTS: 1

13. When a commercial states that a product is superior to any other on the market, the marketer risks
accusations of
a. concealed facts.
b. false labeling.
c. deceptive advertising.
d. concealed facts.
e. puffery.
ANS: E PTS: 1

14. Optimization is defined as

a. the quality of being just, equitable, and impartial.
b. a trade-off between equity and efficiency.
c. an interchange of giving and receiving in social relationships.
d. how wealth or income is distributed between employees within a company.
e. a lack of integrity, incomplete disclosure, and an unwillingness to tell the truth.
ANS: B PTS: 1

© 2013 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different
from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
15. Which of the following has been identified by the Ethics Resource Center as the leading form of
observed misconduct in organizations?
a. Discrimination
b. Bullying
c. Lying
d. Misuse of company resources
e. Sexual harassment
ANS: D PTS: 1

16. An activity is probably ethical if it

a. is approved of by most individuals in the organization and is customary in the industry.
b. is approved of by no one in the organization, but has been carried out in the industry
before.
c. is customary in the industry.
d. is not illegal.
e. does not make consumers feel cheated, deceived, or manipulated.
ANS: A PTS: 1

17. The first step toward understanding business ethics is to

a. know your company's ethical policies.
b. know your own morals and philosophies.
c. know society's ethical policies.
d. develop ethical-issue awareness.
e. develop a set of decision-making rules.
ANS: D PTS: 1

18. Among retail stores, _____ is a larger problem than customer shoplifting.
a. poor stock performance
b. weak leadership
c. internal employee theft
d. misuse of merchandise
e. employee dissatisfaction
ANS: C PTS: 1

19. The ethical decision-making process begins

a. with a conflict of interest.
b. when an individual experiences a conflict between his or her values and those of his or her
firm.
c. when stakeholders trigger ethical issue awareness and individuals openly discuss it with
others.
d. with a conflict in values.
e. when an individual experiences a conflict between his or her values and those of society.
ANS: C PTS: 1

© 2013 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different
from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
20. Which of the following is not a side-effect of being the victim of workplace bullying?
a. Increased productivity
b. Sleep disturbance
c. Depression
d. Increased sick days
e. Stomach problems
ANS: A PTS: 1

21. Accountants must abide by a strict code of ethics that defines their responsibilities to
a. their clients only.
b. their clients and the public interest.
c. the public only.
d. their investors and shareholders.
e. government regulators.
ANS: B PTS: 1

22. Which of the following statements is most correct?

a. Affirmative action programs require quotas to govern employment decisions.
b. Affirmative action programs have eliminated discrimination in employment.
c. Affirmative action programs are required in all organizations by law.
d. Affirmative action programs involve efforts to recruit, hire, train, and promote qualified
individuals from groups that have traditionally been discriminated against on the basis of
race, gender, or other characteristics.
e. Affirmative action programs involve efforts to avoid recruiting, hiring, training, and
promoting qualified individuals from groups that have traditionally been discriminated
against on the basis of race, gender, or other characteristics.
ANS: D PTS: 1

23. Which of the following is not a question you need to ask when you suspect that workplace bullying
has occurred?
a. Is your boss treating you well and compensating you adequately?
b. Is your boss asking obviously impossible things from you without training and stating that,
once completed, the work is never good enough?
c. Are surprise meetings called without your knowledge?
d. Have others at work told you to stop working, talking, or socializing with them?
e. Are you never left alone to do your job without interference?
ANS: A PTS: 1

© 2013 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different
from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
24. _____ is associated with a hostile workplace where someone considered a target is threatened,
harassed, belittled, or verbally abused.
a. A code of conduct
b. Sexual harassment
c. Coercive power
d. Bullying
e. Rewards
ANS: D PTS: 1

25. Which of the following is not a consequence of ethical misconduct?

a. Decreased reputation
b. Shaken customer loyalty
c. Reduced investor confidence
d. Increased sales
e. Legal actions by wronged parties
ANS: D PTS: 1

26. The Kyoto Protocol is an international treaty committed to

a. lowering greenhouse gas emissions.
b. limiting bribery in international business relations.
c. making medical care available to the poverty stricken.
d. eliminating the exploitation of third-world workers.
e. creating equal employment opportunities for men and women.
ANS: A PTS: 1

27. The Age Discrimination in Employment Act specifically outlaws hiring practices that discriminate
against people
a. who are under the age of 18.
b. who are between 16 and 20.
c. who are between 49-69.
d. who are past retirement age.
e. who are younger than 18 and older than 49.
ANS: C PTS: 1

28. Abusive or intimidating behavior is the most common ethical problem for employees. Which of the
following is not related to this concept?
a. Physical threats
b. False accusations
c. Being annoying
d. Profanity
e. Performance probation
ANS: E PTS: 1

© 2013 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different
from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
29. The _____ makes it illegal for individuals, firms, or third parties doing business in American markets
to “make payments to foreign government officials to assist in obtaining or retaining business.”
a. U.S. Foreign Corrupt Practices Act (FCPA)
b. Kyoto Protocol
c. World Trade Organization (WTO)
d. Consumer Protection Act
e. Gramm-Leach-Bliley Act
ANS: A PTS: 1

30. Mr. Smith told his client, Mr. Jabar, who was not an IT expert, that the new software systems were
much better than his existing ones. To convince Mr. Jabar, Mr. Smith used a great deal of technical
jargon that his client did not really understand. Mr. Smith did this intentionally to confuse Mr. Jabar.
This is an example of
a. false advertising.
b. commission lying.
c. omission lying.
d. noise.
e. surrogate lying.
ANS: D PTS: 1

31. _____ involves tricking individuals into revealing their passwords or other valuable corporate
information.
a. Shoulder surfing
b. Remote hacking
c. Social engineering
d. Physical hacking
e. Dumpster diving
ANS: C PTS: 1

32. When Devon looked at what another employee was typing in order to get a password, he committed
a. shoulder surfing.
b. whacking
c. discrimination
d. password guessing
e. hacking
ANS: A PTS: 1

33. A company can be sued for discrimination if it

a. hires minorities.
b. maintains reasonable minority standards.
c. discharges a minority individual, but has a just cause for doing so.
d. uses age as a hiring or firing criterion.
e. has more men than women on staff.
ANS: D PTS: 1

© 2013 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different
from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
34. Affirmative action programs
a. involve the promotion of unqualified employees.
b. are not imposed by federal law on employers.
c. are not very commonly used anymore because there is no need to protect minorities.
d. only involve the training of individuals.
e. involve the recruitment, hiring, promotion, and training of qualified individuals.
ANS: E PTS: 1

35. What type of fraud involves intentional deception on the part of an individual or group in order to
derive an unfair economic advantage over an organization?
a. Channel
b. Integrative
c. Consumer
d. Product
e. Conventional
ANS: C PTS: 1

36. What type of fraudulent activity could involve a consumer staging an accident to seek damages?
a. Whacking
b. Duplicity
c. Guile
d. Defamation
e. Collusion
ANS: B PTS: 1

37. What type of fraudulent activity involves an employee who assists a consumer in fraud?
a. Whacking
b. Duplicity
c. Guile
d. Defamation
e. Collusion
ANS: E PTS: 1

38. Prior to the 2008 financial meltdown, bond ratings agencies were accused of having _____ because
they were paid by the organizations that they rated. The organizations would shop around for the
agency that gave them the best rating.
a. high ethical standards
b. excessively complicated systems
c. a hostile workplace
d. conflicts of interest
e. a good business model
ANS: D PTS: 1

© 2013 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different
from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
 39. _____ are used to obtain or retain business and are not generally considered illegal in the U.S.
a. Facilitation payments
b. Bribes
c. Gifts
d. Coercive techniques
e. Threats
ANS: A PTS: 1

ESSAY

40. Discuss how one goes about recognizing an ethical issue.

ANS:
Pages 104-107

PTS: 1

41. List three business problems, situations, or opportunities that you believe are ethical issues. Explain
why.

ANS:
Pages 104-107

PTS: 1

42. Describe the different methods of obtaining corporate intelligence that competitors commonly use.

ANS:
Page 113-114

PTS: 1

43. What is a conflict of interest? Provide an example.

ANS:
Page 112

PTS: 1

44. What are the different definitions of bribery?

ANS:
Page 112-113

PTS: 1

© 2013 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different
from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
45. Discuss that factors that go into creating a hostile work environment. Why is this a bad thing? Give an
example of a hostile work environment.

ANS:
Pages 109; 116

PTS: 1

© 2013 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different
from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.