Chapter 5 Ethics and Business Decision Making. All Answers

Chapter 5 Ethics and Business Decision Making N.B.: TYPE indicates that a question is new, modified, or unchanged, as follows. N A question new to this edition of the Test Bank. + A question modified ...

Chapter 5 Ethics and Business Decision Making N.B.: TYPE indicates that a question is new, modified, or unchanged, as follows. N A question new to this edition of the Test Bank. + A question modified from the previous edition of the Test Bank. = A question included in the previous edition of the Test Bank. A1. Ethics is the branch of philosophy that focuses on what constitutes right and wrong behavior. T PAGE: 93 TYPE: = NAT: AACSB Ethics AICPA Critical Thinking A2. Business ethics focuses on ethical behavior in the business world. T PAGE: 93 TYPE: = NAT: AACSB Ethics AICPA Risk Analysis A3. An action may be legal and ethical. T PAGE: 94 TYPE: N NAT: AACSB Analytic AICPA Critical Thinking A4. The legality of an action is always clear. F PAGE: 94 TYPE: = NAT: AACSB Analytic AICPA Legal A5. Corporations can be perceived as owing ethical duties to groups other than their shareholders. T PAGE: 94 TYPE: = NAT: AACSB Ethics AICPA Critical Thinking A6. The minimal acceptable standard for ethical behavior is compliance with the law. T PAGE: 94 TYPE: = NAT: AACSB Analytic AICPA Critical Thinking A7. Business ethics is consistent only with short-run profit maximization. F PAGE: 94 TYPE: = NAT: AACSB Ethics AICPA Critical Thinking A8. Focusing on a firm's short-term profits without considering the company’s long-term needs may be acting unethically. T PAGE: 94 TYPE: N NAT: AACSB Ethics AICPA Critical Thinking A9. Ethical codes of conduct can set the ethi¬cal tone of a firm. T PAGE: 96 TYPE: = NAT: AACSB Ethics AICPA Risk Analysis A10. Setting realistic workplace goals can reduce the probability that employ¬ees will act unethically. T PAGE: 96 TYPE: = NAT: AACSB Ethics AICPA Risk Analysis A11. Some companies have set up confidential systems for employees to “raise red flags” about suspected unethical practices. T PAGE: 98 TYPE: N NAT: AACSB Ethics AICPA Risk Analysis A12. Restricting the bonuses that are paid to executives is unethical. F PAGE: 99 TYPE: N NAT: AACSB Ethics AICPA Critical Thinking A13. Ethical reasoning is the process through which an individual rationalizes whatever action he or she chooses to take. F PAGE: 100 TYPE: = NAT: AACSB Ethics AICPA Critical Thinking A14. In ethical terms, a cost-benefit analysis is an assessment of the negative and positive effects of alternative actions on individuals. T PAGE: 101 TYPE: = NAT: AACSB Analytic AICPA Risk Analysis A15. According to utilitarianism, an action that affects the majority adversely is morally wrong. T PAGE: 101 TYPE: = NAT: AACSB Ethics AICPA Critical Thinking A16. It may be unethical for a company with a product that is outlawed in one country to look elsewhere for a market. T PAGE: 101 TYPE: N NAT: AACSB Ethics AICPA Critical Thinking A17. A business firm's profits may suffer if the firm is not a “good corporate citizen.” T PAGE: 103 TYPE: N NAT: AACSB Ethics AICPA Critical Thinking A18. Businesspersons who would choose to act unethically may be deterred from doing so because of public opinion. T PAGE: 104 TYPE: = NAT: AACSB Ethics AICPA Critical Thinking A19. One guideline to evaluating the ethics of a particular action is to “let your conscience be your guide.” T PAGE: 104 TYPE: = NAT: AACSB Analytic AICPA Risk Analysis A20. Bribery of foreign government officials is both an ethical and a legal issue. T PAGE: 106 TYPE: = NAT: AACSB Analytic AICPA Critical Thinking MULTIPLE-CHOICE QUESTIONS A1. John is sales manager for Kleen ‘N Brite Products, Inc. Compared to John’s personal activities, his business activities most likely involve a. more complex ethical issues. b. no ethical issues. c. simpler ethical issues. d. the same ethical issues. A PAGE: 93 TYPE: = NAT: AACSB Reflective AICPA Critical Thinking A2. Mariah works in the public relations department of New Trends Sales Company. Her job includes portraying New Trends’s activities in their best light. In this context, ethics consist of a. a different set of principles from those that apply to other activities. b. the same moral principles that apply to non-business activities. c. those principles that produce the most favorable financial outcome. d. whatever saves New Trends’s “face.” B PAGE: 93 TYPE: = NAT: AACSB Reflective AICPA Critical Thinking A3. Any decision by the management of Fast-Food Franchise Corporation may significantly affect its a. operators only. b. operators, owners, suppliers, the community, or society as a whole. c. owners only. d. suppliers, the community, or society as a whole only. B PAGE: 93 TYPE: = NAT: AACSB Reflective AICPA Risk Analysis A4. Peak & Vale Accountants provides other firms with accounting services. Questions of what is ethical involve the extent to which Peak & Vale has a. a legal duty beyond those duties mandated by ethics. b. an ethical duty beyond those duties mandated by law. c. any duty beyond those mandated by both ethics and the law. d. any duty when it is uncertain whether a legal duty exists. B PAGE: 94 TYPE: = NAT: AACSB Reflective AICPA Critical Thinking A5. Housemate, Inc., makes and sells a variety of household products. With a fair amount of certainty, Housemate’s decision makers can predict whether a given business action would be legal in a. all situations. b. many situations. c. no situations. d. practically no situations. B PAGE: 94 TYPE: = NAT: AACSB Reflective AICPA Legal A6. Kennedy Capital Corporation provides other firms with funds to expand op-erations. If Kenney strictly complies with existing laws, the firm will a. fulfill all business ethics obligations. b. fulfill no business ethics obligations. c. fulfill some business ethics obligations. d. not need to fulfill any business ethics obligations. C PAGE: 94 TYPE: = NAT: AACSB Reflective AICPA Critical Thinking A7. Flexo Trucking Company transports hazard¬ous waste. Garn is a Flexo driver, whom the company knows drives longer hours than federal regulations permit. One night, Garn exceeds the limit and has an accident. Spilled chemicals contaminate Hill City’s water source, forcing the residents to move away. Flexo acted unethically because a. Flexo showed reckless disregard for Hill City’s residents and others. b. Garn exceeded the federal time limit. c. harm was caused by an unfortunate accident. d. Hill City should have better protected its water source. A PAGE: 96 TYPE: N NAT: AACSB Reflective AICPA Critical Thinking A8. Ergonomic Corporation convenes its employees for its managers to announce (1) a new company-wide ethical code of conduct, (2) an ad campaign to publicize the new code, and (3) the discharge of employees who do not adhere to the code. One of the most effective ways to set a tone of ethical behavior within a business organization is a. to create an ethical code of conduct. b. to discharge employees who do not create the appearance of impropriety. c. to post a marketing campaign online touting the firm’s ethical tone. d. for management to direct employees to “do as we say, not as we do.” A PAGE: 98 TYPE: N NAT: AACSB Reflective AICPA Critical Thinking A9. Lyle, vice-president of sales for Mi-T Electric, Inc., adheres to Judeo-Christian relig¬ious ethical standards. With respect to their application, these standards are a. absolute. b. analytical. c. discretionary. d. utilitarian. A PAGE: 100 TYPE: N NAT: AACSB Reflective AICPA Critical Thinking A10. In making business decisions, Glenda, personnel manager for HVAC Maintenance, Inc., applies his belief that all persons have fundamental rights. This is a. a religious rule. b. the categorical imperative. c. the principle of rights. d. utilitarianism. C PAGE: 101 TYPE: N NAT: AACSB Reflective AICPA Critical Thinking A11. Made4U Goods, Inc., asks its employees, many of whom are mem¬bers of the National Machinists Union, to apply the utilitarian theory of ethics. This theory does not require a. a choice among alternatives to produce the maximum so¬cietal utility. b. a determination of whom an action will affect. c. an assessment of the effects of alternatives on those affected. d. the acquiring of the means of production by workers. D PAGE: 101 TYPE: = NAT: AACSB Reflective AICPA Critical Thinking A12. Halley, a lawyer on the staff of International Group, applies the utilitarian theory of ethics in business contexts. Utilitarianism focuses on a. moral values. b. religious beliefs. c. the consequences of an action. d. the nature of an action. C PAGE: 101 TYPE: = NAT: AACSB Ethics AICPA Critical Thinking A13. In making decisions for United Merchandising Company, Vance uses a cost-benefit analysis. This is part of a. duty-based ethics. b. Kantian ethics. c. the principle of rights. d. utilitarianism. D PAGE: 101 TYPE: = NAT: AACSB Ethics AICPA Critical Thinking A14. Chuckie, president of DrinkUp Fresh Beverages, Inc., does not ap¬ply utilitarianism to business ethical issues. One problem with utilitari¬an¬ism is that it a. gives business profits priority over production costs. b. ignores the practical costs of a given set of circumstances. c. requires complex cost-benefit analyses of simple situations. d. tends to justify human costs that many find unacceptable. D PAGE: 101 TYPE: = NAT: AACSB Reflective AICPA Critical Thinking A15. A common ethical dilemma faced by the management of General Holdings Corporation involves the effect that its decision will have on a. one group as opposed to another. b. the firm's competitors. c. the government. d. the U.S. Chamber of Commerce. A PAGE: 101 TYPE: + NAT: AACSB Reflective AICPA Critical Thinking A16. Fealty Credit Corporation asks its employees to evaluate their actions and get on the ethical business decision-making “bandwagon.” Guidelines for judging individual actions include all of the following except a. an individual’s conscience. b. business rules and procedures. c. loopholes in the law or company policies. d. promises to others. C PAGE: 104 TYPE: N NAT: AACSB Reflective AICPA Critical Thinking A17. Spencer Hydraulics Corporation’s ethics committee is asked a business ethics question—should the firm bid low to obtain a contract that it knows it can fulfill only at a higher price? A practical method to investigate and solve this question involves all of the following steps except a. absolution. b. decision. c. inquiry. d. justification. A PAGE: 105 TYPE: N NAT: AACSB Reflective AICPA Critical Thinking A18. Ethical standards would most likely be considered violated if Retail Mart Corporation deals with a company in a developing nation that a. agrees to produce goods at Retail Mart’s desired price. b. goes unnoticed by “corporate watch” groups. c. exploits its workers. d. pays its workers less than the U.S. minimum wage. C PAGE: 106 TYPE: N NAT: AACSB Reflective AICPA Critical Thinking A19. Bilt-Well Construction Corporation makes a side payment to a govern¬ment official in Nigeria to obtain a contract. In the United States, this is a. illegal and unethical. b. illegal but not unethical. c. unethical but not illegal. d. legal and ethical. A PAGE: 107 TYPE: = NAT: AACSB Reflective AICPA Critical Thinking A20. To assist in detecting illegal bribes, Cut Rite Contractors, Inc., and all U.S. companies, must a. conceal financial records that reveal past bribes. b. keep records that “accurately and fairly” reflect financial activities. c. make bribes through third parties rather than directly to officials. d. permit payments to foreign officials that are unlawful in that country. B PAGE: 107 TYPE: N NAT: AACSB Analytic AICPA Legal ESSAY QUESTIONS A1. Ophelia, an executive with Pharma Drug Distribution, Inc., has to decide whether to market a product that might have undesirable side effects for a small per¬centage of users. How should Ophelia de¬cide whether to sell the product? How does the standard of ethics that is applied affect this answer? A2. Matchless Clothing Company buys clothing assembled by Nantra, Ltd., a for-eign firm that employs young children for long hours and low pay. Nantra’s na¬tion does not enforce its child labor laws. Human International Politics (HIP), a political activist organization, discovers Matchless’s connection to Nantra and plans to reveal this information. Before HIP does so, however, Matchless publicly releases the informa¬tion itself and announces that it is severing its relationship with Nantra. Matchless publicizes its action in its advertising, and the company’s sales and profits increase, apparently as a direct result. Has Matchless acted unethically in any way? From an ethical perspective, is Matchless’s conduct in this situation more important than whatever its mo¬tive might be?