Business Ethics MCQ With Answers PDF

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BUSINESS ETHICS MCQ WITH ANSWERS

1. The framework for establishing good corporate governance and accountability was originally setup by

A. Nestle committee
B. Rowntree committee
C. Cadbury committee
D. Thornton committee
Discussion
B. Rowntree committee

Which of the following is not one of the underlying principles of the corporate governance combined
code of practice?

A. Accountability
B. Openness
C. Acceptability
D. Integrity
Discussion
C. Acceptability
3. External audit of the accounts of a limited company is required?

A. Because it is demanded by the company’s bankers


B. By the companies act 2006
C. At the discretion of the shareholders
D. To detect fraud
Discussion
B. By the companies act 2006
4. Directors responsibilities are unlikely to include

A. a duty to keep proper accounting records


B. a fiduciary duty
C. a duty to propose high dividends for shareholders
D. a duty of care
Discussion
C. a duty to propose high dividends for shareholders
5. A company may become insolvent if it
A. makes a loss
B. has negative working capital
C. cannot meet its budgeted level of profit
D. cannot pay creditors in full after realisation of its assets
Discussion
D. cannot pay creditors in full after realisation of its assets

6. Fraudulent trading may be

A. a criminal offence committed only by directors of a limited company


B. a civil and a criminal offence committed by an employee
C. a civil and a criminal offence committed only by directors of a limited company
D. a civil offence committed by an employee
Discussion
B. a civil and a criminal offence committed by an employee
7. A director of a limited company may not be liable for wrongful trading if he or she

A. increased the valuation of its inventories to cover any potential shortfall


B. brought in some expected sales from next year in to the current year
C. took every step to minimise the potential loss to creditors
D. introduce into the balance sheet an asset based on a valuation of its brands sufficient to meet
Discussion
C. took every step to minimise the potential loss to creditors
8. Disqualification of directors may result from breaches under the

A. Health and Safety Act


B. Financial Services Act
C. Sale of Goods Act
D. Companies Act
Discussion
D. Companies Act
9. According to clause 49 on independent directors. What should be minimum age of
independentdirector.

A. 21
B. 22
C. 23
D. 24
Discussion
A. 21
10. who formed the ICGN?

A. European governments
B. US share holders
C. Pension funds
D. Stock markets
Discussion
C. Pension funds

11. A company cannot issue redeemable preference shares for a period exceeding

A. 5 years
B. 10 years
C. 15 years
D. 20 years
Discussion
D. 20 years
12. which one is the dimension(approach) of corporate social responsibility?

A. Corporate philanthropy
B. Stake holders priorities and sustainable development
C. Ethical business
D. All of the above
Discussion
D. All of the above

13. According to clause 49 on independent directors. What can be maximum tenure ofindependent
director.

A. 2 terms of 5 years each


B. 3 terms of 5 years each
C. 2 terms of 10 years each
D. 3 terms of 4 years each
Discussion
A. 2 terms of 5 years each
14. According to section 179 which one of the following is a power of director?

A. To buy back its shares


B. Sell lease or otherwise dispose of the undertakings of the company
C. Remit or give time for the repayment of any debt due by a director
D. Making political contributions exceeding specified limits
Discussion
A. To buy back its shares
15. What is kieretsu

A. Pension fund
B. Corporate group
C. Stock exchange
D. Futures Market
Discussion
B. Corporate group
16. The concept of Corporate Social Responsibility originated in which time period?

A. 1920’s and 1930’s


B. 19th Century
C. 1980’s and 1990’s
D. 1960’s and 1970’s
Discussion
D. 1960’s and 1970’s

17. Worldwide, about ___________ percent of businesses in the private sector are small ormedium
sized.

A. 80
B. 85
C. 90
D. 99
Discussion
C. 90
18. The generally accepted definition of a small business is one with ____________ or feweremployees.
A. 10
B. 20
C. 25
D. 50
Discussion
D. 50
19. The generally accepted definition of a medium business is one with _____________ or
feweremployees.

A. 50
B. 100
C. 200
D. 250
Discussion
D. 250
20. In the United States, small or medium sized businesses provide over ___________ percent oftotal
employment.

A. 25
B. 40
C. 50
D. 75
Discussion
C. 50
21. Owners of stock in a corporation are only liable for ____________.

A. the amount they have invested in the company’s stock


B. their personal assets
C. the amount they have invested in the company’s stock and their personal assets
D. none of the above.
Discussion
D. none of the above.
22. A ____________ of an issue consists of weighing and balancing all of the competing demands on a
firm by each of those who have a claim on it.

A. stakeholder analysis
B. board of directors analysis
C. corporation analysis
D. management analysis
Discussion
A. stakeholder analysis

23. The ____________ that corporations must meet is “do no harm”.

A. moral obligation
B. moral minimum
C. moral requirement
D. moral duty
Discussion
B. moral minimum
24. In large corporations, the ____________ is/are the legal overseers of management.

A. CEO
B. shareholders
C. board members
D. none of the above
Discussion
C. board members
25. The ____________ position is that a corporation can and should be evaluated not only interms of its
financial bottom line, but also in terms of its environmental bottom line and its social/ethical bottom
line.

A. Bottom line
B. Double Bottom line
C. Triple Bottom line
D. Final line
Discussion
B. Double Bottom line

26. Triple Bottom Line reporting refers to:

A. using a low, medium and high estimates for profitability forecasts.


B. measuring the impact of the firm on stockholders, customers and employees.
C. measuring the social, environmental, and financial performance of the firm.
D. measuring the impact of local, state, and federal governments on the firm.
Discussion

C. measuring the social, environmental, and financial performance of the firm.

27. Corporate governance can be defined as:

A. the system used by firms to control the actions of their employees.


B. the election process used to vote in a new Board of Director.
C. the corporate compliance system used by the firm.
D. the system used by firms to identify who the critical stakeholders are for the firm.
Discussion

A. the system used by firms to control the actions of their employees.

28. The system that is used by firms to control and direct their operations and the operations oftheir
employees is called:

A. Corporate Compliance.
B. Corporate Governance.
C. Corporate Control.
D. Corporate Directive.
Discussion

B. Corporate Governance.

29. Which board of directors committee is responsible for the guidelines on how the board ofdirectors
should operate.

A. Operating
B. Corporate governance
C. Corporate compliance
D. Guiding
Discussion

B. Corporate governance

30. The Sarbanes-Oxley Act was a direct response to which ethics scandals?

A. Tyco
B. WorldCom
C. Enron
D. None of the above.
Discussion

C. Enron

31. What is the name of the process in which an employee informs another responsible employeein the
company about potentially unethical behavior?

A. Whistle-blowing
B. Purging and releasing
C. Identification
D. Information transfer
Discussion

A. Whistle-blowing

32. There are ___________ conditions that, if satisfied, change the moral status of whistleblowing.

A. three
B. four
C. five
D. six
Discussion

C. five

33. An example of a whistle blower whose actions were a form of internal government whistleblowing
is:

A. Sherron Watkins.
B. Coleen Rowley.
C. Cynthia Cooper.
D. Lee Iacocca.
Discussion

B. Coleen Rowley.

34. One whistle blower the text mentions is Cynthia Cooper who was the vice president ofinternal audit
at ____________.

A. Enron
B. WorldCom
C. Tyco
D. none of the above
Discussion

B. WorldCom

35. One classic example of whistle-blowing is the:

A. Ford Pinto case.


B. Lincoln case.
C. Toyota case.
D. none of the above.
Discussion

A. Ford Pinto case.

36. A whistle-blower:

A. doesn’t have to be a past or present member of the organization.


B. doesn’t have to report activity that is illegal, immoral, or harmful.
C. is any employer who spreads gossip.
D. far from being disloyal, may be acting in the best interest of the organization.
Discussion

C. is any employer who spreads gossip.

37. The Sarbanes-Oxley Act:

A. makes it easier to fire whistle blowers.


B. reduces the law’s protection of employees who disclose securities fraud.
C. makes it illegal for executives to retaliate against employees who report possible violations of federal
law.
D. provides penalties for blowing the whistle illegitimately or maliciously.
Discussion

D. provides penalties for blowing the whistle illegitimately or maliciously.

38. Inside traders ordinarily defend their actions by claiming that they don’t injure:
A. their boss.
B. their family.
C. the government.
D. any one.
Discussion

D. any one.

39. Shareholders have the right to know all except:

A. Information on the management of the corporation


B. Trade secrets
C. The companies financial position
D. The companies general plans for the future.
Discussion

B. Trade secrets

40. Which act provides sweeping new legal protection for employees who report possiblesecurities
fraud making it unlawful for companies to “discharge, demote, suspend, threaten, harass, or in any
other manner discriminate against” them?

A. Sarbanes-Oxley Act of 2002


B. Foreign Corruption Act
C. Economic Espionage Act
D. U.S. vs. O’Hagan
Discussion

A. Sarbanes-Oxley Act of 2002

41. What is meant by the phrase CSR?

A. Corporate Social Responsibility


B. Company Social Responsibility
C. Corporate Society Responsibility
D. Company Society Responsibility
Discussion

A. Corporate Social Responsibility


42. What is meant by the phrase 'teleological ethics'?

A. Is used to judge is an action is right, fair and honest.


B. An action can only be judged by its consequences
C. Developing the individual personal characteristics
D. The key purpose of ethics is to increase freedom.
Discussion

B. An action can only be judged by its consequences

43. What, according to Adam Smith, is the best way to promote collective interest?

A. Through government making decisions about what is in the public interest.


B. Through everyone working together to support each other.
C. Through everyone working on their own self interest
D. Through individuals forgoing their personal interest for the good of the collective.
Discussion

C. Through everyone working on their own self interest

44. Why, according to stakeholder theory, is it in companies' best interests to pay attention to
theirstakeholders?

A. If firms only act in their own self-interest employees may feel exploited.
B. If firms only act in their own self-interest government might put more regulation on them.
C. If firms only act in their own self-interest customers might not like the image that the company
portray.
D. If firms only act in their own self-interest and inflict harm on stakeholders then society might
withdraw its support.
Discussion

D. If firms only act in their own self-interest and inflict harm on stakeholders then society might
withdraw its support.

45. What is the enlightened self-interest model of CSR?

A. That it is in an organization's own best interest to put itself first rather than its ethics.
B. That it is in an organization's best interest to consider what a shareholder would want.
C. That it is in an organization's own best interest to act in an ethical way.
D. That it is in an organization's own best interest to follow the legislation and abide by the law.
Discussion

C. That it is in an organization's own best interest to act in an ethical way.

46. What is green washing?

A. Transforming products to be more ethical.


B. Making a product appear more ethical that it really is.
C. Converting the company to green production methods.
D. Convincing customers to buy ethically.
Discussion

B. Making a product appear more ethical that it really is.

47. What is triple bottom line?

A. An accounting tool that looks at the impact on people, planet and profits.
B. A management strategy which states all the attention should be on profits.
C. An accounting tool that looks at cost, profit and loss.
D. A management strategy which focuses on corporate social responsibility.
Discussion

A. An accounting tool that looks at the impact on people, planet and profits.

48. A ________ _________ sets out the purpose and general direction for the organisation?

A. Mission statement
B. Purpose statement
C. Vision
D. Profit statement
Discussion

A. Mission statement

49. Which of the following would most effectively act as the primary objective of a
businessorganisation?

A. To make a profit
B. To procure resources
C. To communicate with shareholders
D. To mediate between the organisation and the environment
Discussion

A. To make a profit

50. What is the purpose of a balanced scorecard?

A. To measure contribution of people to business growth


B. To combine a range of qualitative and quantitative indicators of performance
C. To relate business performance to customer satisfaction
D. All of the above
Discussion

B. To combine a range of qualitative and quantitative indicators of performance

51. Which of the following does the term Corporate Social Responsibility relate to?

A. Ethical conduct
B. Environmental practice
C. Community investment
D. All of the above
Discussion

D. All of the above

52. Who are organisational stakeholders?

A. Government
B. Employees
C. Customers
D. All of the above
Discussion

D. All of the above

53. What is Ethics to do with?

A. The wider community


B. Business
C. Right and wrong
D. Nothing
Discussion

C. Right and wrong

54. Which of the following is an example of an area where business ethics apply?

A. Conduct of international operations


B. Nowhere
C. In the personal life of staff
D. None of the above
Discussion

A. Conduct of international operations

55. Which legislation relates to the concept of business ethics?

A. Freedom of Information Act


B. Food Act
C. Building regulations
D. All of these
Discussion

A. Freedom of Information Act

56. The four types of social responsibility include:

A. legal, philanthropic, economic, and ethical


B. ethical, moral, social, and economic
C. philanthropic, justice, economic, and ethical
D. legal, moral, ethical, and economic
Discussion

A. legal, philanthropic, economic, and ethical

57. The ________ dimension of social responsibility refers to a business's societal contribution oftime,
money, and other resources.

A. Ethical
B. Philanthropic
C. Volunteerism
D. Strategic
Discussion

B. Philanthropic

58. Stakeholders are considered more important to an organization when:

A. they can make use of their power on the organization


B. they do not emphasize the urgency of their issues
C. their issues are not legitimate
D. they can express themselves articulately
Discussion

A. they can make use of their power on the organization

59. A ________ is a problem, situation, or opportunity requiring an individual, group, ororganization to


choose among several actions that must be evaluated as right or wrong.

A. Crisis
B. ethical issue
C. indictment
D. fraud
Discussion

B. ethical issue

60. Which moral philosophy seeks the greatest good for the greatest number of people?

A. Consequentialism
B. Utilitarianism
C. Egoism
D. Ethical formalism
Discussion

B. Utilitarianism

60. Which moral philosophy seeks the greatest good for the greatest number of people?
A. Consequentialism
B. Utilitarianism
C. Egoism
D. Ethical formalism
Discussion

B. Utilitarianism

61. What type of justice exists if employees are being open, honest, and truthful in theircommunications
at work?

A. Procedural
B. Distributive
C. Ethical
D. Interactional
Discussion

D. Interactional

62. A high-commitment approach to environmental issues may include all of the following except:

A. risk analysis
B. stakeholder analysis
C. green-washing
D. strategic sustainability auditing
Discussion

C. green-washing

63. Better access to certain markets, differentiation of products, and the sale of pollution-
controltechnology are ways in which better environmental performance can:

A. increase revenue
B. increase costs
C. decrease revenue
D. decrease costs
Discussion

A. increase revenue
64. Most companies begin the process of establishing organizational ethics programs bydeveloping:

A. ethics training programs.


B. codes of conduct.
C. ethics enforcement mechanisms.
D. hidden agendas.
Discussion

B. codes of conduct.

65. When a firm charges different prices to different groups of customers, it may be accused of:

A. cultural relativism
B. money laundering
C. facilitating payments
D. price discrimination
Discussion

A. cultural relativism

66. The social economy partnership philosophy emphasizes:

A. cooperation and assistance.


B. profit maximization.
C. competition.
D. restricting resources and support.
Discussion

A. cooperation and assistance.

67. Which of the following is not a driver of responsible competitiveness?

A. Policy drivers
B. Development drivers
C. Business action
D. Social enablers
Discussion

B. Development drivers
68. Which of the following is a problem presented by ethics audits?

A. They may be used to reallocate resources.


B. They identify practices that need improvement.
C. Selecting auditors may be difficult.
D. They may pinpoint problems with stakeholder relationships.
Discussion

C. Selecting auditors may be difficult.

69. The first step in the auditing process should be to secure the commitment of:

A. employees.
B. top executives and directors.
C. stockholders.
D. customers.
Discussion

B. top executives and directors.

70. Codes of conduct and codes of ethics

A. are formal statements that describe what an organization expects of its employees.
B. become necessary only after a company has been in legal trouble.
C. are designed for top executives and managers, not regular employees.
D. rarely become an effective component of the ethics and compliance program.
Discussion

A. are formal statements that describe what an organization expects of its employees.

71. Which of the following is NOT one of the primary elements of a strong organizationalcompliance
program?

A. A written code of conduct


B. An ethics officer
C. Significant financial expenditures
D. A formal ethics training program
Discussion
C. Significant financial expenditures

72. ______________ are standards of behaviour that groups expect of their members.

A. Codes of conduct.
B. Group values.
C. Group norms.
D. Organizational norms.
Discussion

C. Group norms.

73. In a ______________ organization, decision making is delegated as far down the chain ofcommand
as possible.

A. Decentralized
B. Creative
C. Flexible
D. Centralized
Discussion

D. Centralized

74. Managerial ethics can be characterised by all of the following levels except

A. immoral management
B. amoral management
C. demoral management
D. moral management
Discussion

C. demoral management

75. External audit of the accounts of a limited company is required

A. because it is demanded by the company’s bankers


B. by the Companies Act 2013
C. at the discretion of the shareholders
D. to detect fraud
Discussion

B. by the Companies Act 2013

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