Assignment
1. Sarah, the controller of a large beverage supplier, supervises two employees. Her boss, Vladimir, instructs her to increase the company's inventory balance for an amount that is material to the financial statements by crediting several small "miscellaneous" expense accounts. She does not understand why he wants her to make these entries but immediately directs one of her staff to make them because she has been instructed to do so. Which of the following statements best describes Sarah's actions?
a) Sarah failed to evaluate a potential ethical issue
b) Sarah failed to refer the matter to the AICPA ethics hotline
c) Sarah failed to ensure that her stuff was competent to make the entries
d) Sarah failed to consider the rules of the regulators
2. Josie, an accounting supervisor in Monk & Sons Realty, instructs Maria, her employee, to make certain accounting entries in the company's books that will increase revenue. Maria researches the matter, confirming her concern that these entries would overstate revenue, and informs Josie that recognizing revenue in this manner would be premature and not consistent with generally accepted accounting principles (GAAP) but Josie disagrees and insists that Maria record the entries. The amount of revenue is material to Monk's financial statements. According to the AICPA rules, what should Maria do first?
a) resign her position quietly
b) report the matter to the senior partner in the firm
c) take out a professional liability policy
d) discuss her concern with Josie boss
3. The AICPA Ethics Codification includes the following sections:
a) preface, rules and interpretations applicable to members in tax practice and rules and interpretations applicable to members in business
b) preface, rules and interpretations applicable to members in public practice and rules and interpretations applicable to members in business
c) preface, rules and interpretations applicable to members in tax practice and rules and interpretations applicable to members in audit practice.
d) preface, rules and interpretations applicable to members in audit practice and rules and interpretations applicable to members in business
4. Which phrase is used by the Code of Professional Conduct to describe integrity.
a) candid within the constraints of client confidentiality
b) forceful advocate of the client's positon
c) valued business advisor to the client
d) willing to subordinate judgment to achieve a proper outcome
5. Sophie, the CFO of Slolum Ski Supplies, received a watch from one of her company's largest vendors, Colorado Ski Shoppe. She received the gift with a card congratulating her on Slolum's recent merger with another company. In determining whether accepting the gift would create a significant threat to her compliance with the AICPA Code, which factor should Sophie consider?
a) whether she disclosed receipt of the gift to the board of directors
b) whether she truly earned the gift
c) whether the gift was reasonable in the circumstances
d) whether the gift cost more than a $100.