Business Ethics mcq set 1

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

Answer

B. Rowntree committee

2. 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

Answer

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

Answer

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

Answer

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

Answer

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

Answer

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

Answer

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

Answer

D. Companies Act

9. According to clause 49 on independent directors. What should be minimum age of independent director.
A. 21
B. 22
C. 23
D. 24

Answer

A. 21

10. who formed the ICGN?
A. European governments
B. US share holders
C. Pension funds
D. Stock markets

Answer

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

Answer

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

Answer

D. All of the above

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

Answer

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

Answer

A. To buy back its shares

15. What is kieretsu
A. Pension fund
B. Corporate group
C. Stock exchange
D. Futures Market

Answer

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

Answer

D. 1960’s and 1970’s

17. Worldwide, about ___ percent of businesses in the private sector are small or medium sized.
A. 80
B. 85
C. 90
D. 99

Answer

C. 90

18. The generally accepted definition of a small business is one with ___ or fewer employees.
A. 10
B. 20
C. 25
D. 50

Answer

D. 50

19. The generally accepted definition of a medium business is one with ___ or fewer employees.
A. 50
B. 100
C. 200
D. 250

Answer

D. 250

20. In the United States, small or medium sized businesses provide over ___ percent of total employment.
A. 25
B. 40
C. 50
D. 75

Answer

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.

Answer

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

Answer

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

Answer

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

Answer

C. board members

25. The ___ position is that a corporation can and should be evaluated not only in terms 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

Answer

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.

Answer

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.

Answer

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.

Answer

B. Corporate Governance.

29. Which board of directors committee is responsible for the guidelines on how the board of directors should operate.
A. Operating
B. Corporate governance
C. Corporate compliance
D. Guiding

Answer

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.

Answer

C. Enron

31. What is the name of the process in which an employee informs another responsible employee in the company about potentially unethical behavior?
A. Whistle-blowing
B. Purging and releasing
C. Identification
D. Information transfer

Answer

A. Whistle-blowing

32. There are ___ conditions that, if satisfied, change the moral status of whistleblowing.
A. three
B. four
C. five
D. six

Answer

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.

Answer

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

Answer

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.

Answer

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.

Answer

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.

Answer

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.

Answer

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.

Answer

B. Trade secrets

40. Which act provides sweeping new legal protection for employees who report possible securities 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

Answer

A. Sarbanes-Oxley Act of 2002

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