ETH557 – ACCOUNTING ETHICS Final exam
In 2003, FASB and IASB met and established four criteria for establishing revenue recognition. To recognize revenue, which of the following conditions must be present?
·
A change in assets has occurred and can be appropriately measured.
·
Payment for the sale must be received prior to recognizing the revenue.
·
The product or deliverable, in the case of a service business, has been received by the customer.
·
A promise to deliver has been established.
2
Failure to provide any care in fulfilling a duty owed to another is called
·
gross negligence
·
constructive fraud
·
breach of contract
·
negligence
3
Which of the following is a fundamental characteristic of the market system?
·
Unselfish behavior
·
Central planning by government
·
Government-set wages and prices
·
Property rights
4
The income effect indicates that
·
consumers should substitute among various products until the marginal utility from the last unit of each product purchased is the same
·
a rise in money income will cause consumers to buy smaller quantities of normal goods
·
when the price of a product falls, a consumer will be able to buy more of it with a specific income
·
when the price of a product falls, the lower price will induce the consumer to buy more of that product now that it is relatively cheaper
5
The price elasticity of demand coefficient measures
·
the slope of the demand curve
·
how far business executives can stretch their fixed costs
·
buyer responsiveness to price changes
·
the extent to which a demand curve shifts as incomes change
6
A normative statement is one that
·
applies only to microeconomics
·
is based on the law of averages
·
is based on value judgments
·
applies to macroeconomics
7
Many conflicts of interest in business contracts can be remedied ethically by which of the following?
·
Deception and disclosure
·
Camouflage and consent
·
Disclosure and consent
·
Conflicts of interest can never be remedied ethically
8
Four professional general standards and responsibilities for Certified Public Accountants are quality control and assurance, professional judgment, competence, and:
·
integrity
·
diligence
·
independence
·
knowledge
9
In 2002, Adelphia Cable filed bankruptcy when it was discovered that
·
excess fictitious expenses of $1 million were added to the income statement
·
bank debt in excess of $2.3 billion was not shown on the financial statements
·