,Chapter 1 - Ethics Expectations
1. The difference between what the public thinks it is getting in audited financial statements and what the public is
actually getting is known as:
a. The credibility gap.
b. The expectations gap.
c. The audit gap.
d. The stewardship gap.
e. None of these.
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
REFERENCES: The Ethics Environment for Business: The Battle for Credibility, Reputation, &
Competitive Advantage
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: BRK.27.01.01 - Describe current ethics expectations.
KEYWORDS: Bloom’s: Remember
DATE CREATED: 12/26/2025 11:38 PM
DATE MODIFIED: 12/30/2025 1:34 PM
2. Which of the following is not a trend described in Chapter 1 as having an impact on the ethics of business?
a. Directors’ legal liability.
b. Management’s stated intention to protect reputation.
c. Auditors’ legal liability.
d. Management’s assertions to shareholders on the adequacy of internal controls.
e. Management’s stated intention to manage risk.
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
REFERENCES: The Ethics Environment for Business: The Battle for Credibility, Reputation, &
Competitive Advantage
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: BRK.27.01.03 - Explain the importance of accountability to stakeholders
KEYWORDS: Bloom’s: Remember
DATE CREATED: 12/26/2025 11:42 PM
DATE MODIFIED: 12/26/2025 11:45 PM
Copyright Cengage Learning. Powered by Cognero. Page 1
,Chapter 1 - Ethics Expectations
3. Which corporate report discusses subjects that include environmental, health and safety, philanthropic, and other social
impacts?
a. A corporate annual report.
b. A corporate social responsibility report.
c. A corporate quarterly report.
d. A corporate stakeholder report.
e. A corporate ethics committee report.
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
REFERENCES: The Ethics Environment for Business: The Battle for Credibility, Reputation, &
Competitive Advantage
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: BRK.27.01.03 - Explain the importance of accountability to stakeholders
KEYWORDS: Bloom’s: Remember
DATE CREATED: 12/26/2025 11:46 PM
DATE MODIFIED: 12/26/2025 11:49 PM
4. Professional accountants, in their fiduciary role, owe their primary loyalty to:
a. the accounting profession.
b. the client.
c. the general public.
d. government regulations.
e. All of these.
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
REFERENCES: New Expectations for Business
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: BRK.27.01.04 - Describe how current ethics expectations may affect business
governance, planning, decision making, behavior, performance, and reporting
KEYWORDS: Bloom’s: Remember
DATE CREATED: 12/26/2025 11:52 PM
DATE MODIFIED: 12/26/2025 11:54 PM
Copyright Cengage Learning. Powered by Cognero. Page 2
, Chapter 1 - Ethics Expectations
5. Ethical corporate behavior is expected to lead to:
a. Higher profitability in the short term.
b. Higher profitability in both the short term and the long term.
c. Lower profitability in the long term.
d. Higher profitability in the long term.
e. Lower profitability in both the short term and the long term.
ANSWER: d
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: Responses & Developments
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: BRK.27.01.02 - Explain why current ethics expectations have developed
KEYWORDS: Bloom’s: Understand
DATE CREATED: 12/26/2025 11:54 PM
DATE MODIFIED: 12/30/2025 6:42 AM
6. Examining the interests of stakeholders is probably required for:
a. High short-term profits.
b. Optimal medium- and longer-term profits.
c. Continuing support from stakeholder groups.
d. Effective risk management.
e. All of these.
ANSWER: a
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: Responses & Developments
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: BRK.27.01.02 - Explain why current ethics expectations have developed
KEYWORDS: Bloom’s: Understand
DATE CREATED: 12/26/2025 11:56 PM
DATE MODIFIED: 12/30/2025 6:43 AM
Copyright Cengage Learning. Powered by Cognero. Page 3
1. The difference between what the public thinks it is getting in audited financial statements and what the public is
actually getting is known as:
a. The credibility gap.
b. The expectations gap.
c. The audit gap.
d. The stewardship gap.
e. None of these.
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
REFERENCES: The Ethics Environment for Business: The Battle for Credibility, Reputation, &
Competitive Advantage
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: BRK.27.01.01 - Describe current ethics expectations.
KEYWORDS: Bloom’s: Remember
DATE CREATED: 12/26/2025 11:38 PM
DATE MODIFIED: 12/30/2025 1:34 PM
2. Which of the following is not a trend described in Chapter 1 as having an impact on the ethics of business?
a. Directors’ legal liability.
b. Management’s stated intention to protect reputation.
c. Auditors’ legal liability.
d. Management’s assertions to shareholders on the adequacy of internal controls.
e. Management’s stated intention to manage risk.
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
REFERENCES: The Ethics Environment for Business: The Battle for Credibility, Reputation, &
Competitive Advantage
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: BRK.27.01.03 - Explain the importance of accountability to stakeholders
KEYWORDS: Bloom’s: Remember
DATE CREATED: 12/26/2025 11:42 PM
DATE MODIFIED: 12/26/2025 11:45 PM
Copyright Cengage Learning. Powered by Cognero. Page 1
,Chapter 1 - Ethics Expectations
3. Which corporate report discusses subjects that include environmental, health and safety, philanthropic, and other social
impacts?
a. A corporate annual report.
b. A corporate social responsibility report.
c. A corporate quarterly report.
d. A corporate stakeholder report.
e. A corporate ethics committee report.
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
REFERENCES: The Ethics Environment for Business: The Battle for Credibility, Reputation, &
Competitive Advantage
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: BRK.27.01.03 - Explain the importance of accountability to stakeholders
KEYWORDS: Bloom’s: Remember
DATE CREATED: 12/26/2025 11:46 PM
DATE MODIFIED: 12/26/2025 11:49 PM
4. Professional accountants, in their fiduciary role, owe their primary loyalty to:
a. the accounting profession.
b. the client.
c. the general public.
d. government regulations.
e. All of these.
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
REFERENCES: New Expectations for Business
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: BRK.27.01.04 - Describe how current ethics expectations may affect business
governance, planning, decision making, behavior, performance, and reporting
KEYWORDS: Bloom’s: Remember
DATE CREATED: 12/26/2025 11:52 PM
DATE MODIFIED: 12/26/2025 11:54 PM
Copyright Cengage Learning. Powered by Cognero. Page 2
, Chapter 1 - Ethics Expectations
5. Ethical corporate behavior is expected to lead to:
a. Higher profitability in the short term.
b. Higher profitability in both the short term and the long term.
c. Lower profitability in the long term.
d. Higher profitability in the long term.
e. Lower profitability in both the short term and the long term.
ANSWER: d
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: Responses & Developments
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: BRK.27.01.02 - Explain why current ethics expectations have developed
KEYWORDS: Bloom’s: Understand
DATE CREATED: 12/26/2025 11:54 PM
DATE MODIFIED: 12/30/2025 6:42 AM
6. Examining the interests of stakeholders is probably required for:
a. High short-term profits.
b. Optimal medium- and longer-term profits.
c. Continuing support from stakeholder groups.
d. Effective risk management.
e. All of these.
ANSWER: a
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: Responses & Developments
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: BRK.27.01.02 - Explain why current ethics expectations have developed
KEYWORDS: Bloom’s: Understand
DATE CREATED: 12/26/2025 11:56 PM
DATE MODIFIED: 12/30/2025 6:43 AM
Copyright Cengage Learning. Powered by Cognero. Page 3
