Chapter 3

Chapter 003 Organizational Ethics
True / False Questions
1. An organization's operating culture is a sum of all the policies and procedures, both written
and informal.
True False
2. Only shareholders have a vested interest in the ethical performance of an organization.

True False
3. Organizational culture can be defined as the values, beliefs, and norms shared by all the
competitors and employees of that organization.
True False
4. The culture represents the sum of all the policies and procedures from each of the
functional departments in the organization, in addition to the policies and procedures that are
established for the organization as a whole.
True False
5. A value chain is composed of the key functional inputs that an organization provides in the
transformation of raw materials into a delivered product or service.
True False
6. Finance and marketing are key functions in a value chain.

True False
7. Finance and marketing are line functions, supporting each of the key functional areas.
True False
3-1
8. Human resources management supports each of the functional areas in a value chain.
True False
9. R&D professionals carry the responsibility for the future growth of the organization.
True False
10. Given that R&D does not interact directly with customers, the potential for ethical
dilemmas is nonexistent.
True False
11. Product quality is the real ethical dilemma that R&D professionals face.
True False
12. Human Resource Managers carry the responsibility for the future growth of the
organization.
True False
13. The manufacturing process is responsible for ensuring that the product reaches the hands
of a satisfied customer.
True False
14. Marketers see themselves as providing products (services) to customers who have already
expressed a need for and a desire to purchase those products.
True False
15. Universal ethics refer to the ethical choices that offer the greatest good for the greatest
number of people.
True False
3-2
16. Universal Ethics are actions performed out of duty and obligation to a purely moral ideal,
rather than based on the needs of the situation, since the universal principles are seen to apply
to everyone, everywhere, all the time.
True False
17. The actions taken out of duty and obligation to a purely moral ideal refers to
utilitarianism.
True False
18. Marketing professionals abide by a code of ethics adapted by the American Marketing
Association.
True False
19. The code of ethics adapted by the American Marketing Association speaks about doing no
harm, fostering trust, and improving "customer confidence" in the integrity of the marketing
exchange system.
True False
20. Even with the code of ethics adapted by the AMA, the question remains as to whether or
not encouraging people to buy things they don't need is truly an ethical process.
True False
21. If an employee leaves a company, the HR department should host an exit interview to
ensure that anything the organization can learn from the departure is fed back into the
company's strategic plan for future growth and development.
True False
3-3
22. The human resources function within an organization does not need to be directly
involved in the relationship between the company and the employee, such as with the
documentation of periodic performance reviews.
True False
23. Advocates of ethical business conduct argue that HR should be at the center of any
corporate code of ethics.
True False
24. Advocates of ethical business conduct argue that HR should be at the center of and the
sole creator of any corporate code of ethics.
True False
25. Marketing is responsible for ensuring that the right programs and policies on ethical
business conduct are in place.
True False
26. HR professionals must help ensure that ethics is a top organizational priority.
True False
27. HR must stay abreast of ethics issues, and in particular, the changing legislation and
sentencing guidelines for unethical conduct.
True False
28. The finance function of an organization can be divided into two distinct areas: financial
transactions and the accounting function.
True False
3-4
29. The auditing function keeps track of all the company's financial transactions by
documenting the money coming in and money going out and balancing the accounts at the
end of the period.
True False
30. The accounting function is the certification of an organization's financial statements as

being accurate.
True False
31. Internal auditors provide counsel for improving controls, processes and procedures,
performance, and risk management.
True False
32. The accounting profession is governed by a set of laws and established legal precedents.
True False
33. GAAP are accepted principles utilized as standard operating procedures within the
industry.
True False
34. GAAP, like any operating standard, are open to interpretation and abuse.
True False
35. Corporations try to manage their expansion at a steady rate of growth.

True False
3-5
36. When corporations grow too quickly or steadily from year to year, investors may see them
as in danger of falling behind their competition.
True False
37. It is legal to defer receipts from one quarter to the next to manage your tax liability.
True False
38. A set of accurate financial statements that present an organization as financially stable,
operationally efficient, and positioned for strong future growth can do a great deal to enhance
the reputation and goodwill of an organization.
True False
39. When a company's financial statements have been certified by an objective third party to
be "clean," that certification is meant to be for the company's benefit.
True False
40. A situation where one relationship or obligation places you in direct conflict with an
existing relationship or obligation refers to value chain interest.
True False
41. Selling a product that has the potential to be harmful to your customers represents a
conflict of interest.
True False
42. According to the Ethics Resource Center, the most frequently observed misconduct by
employees was lying to employees, customers, vendors, or the public.
True False
3-6
43. Profits are the main reason behind stretching the truth and bending the rules on a regular
occurrence in the workplace.
True False
Multiple Choice Questions
44. An organization's ______ consists of the values, beliefs, and norms shared by all of the
employees of that organization.
A. external culture
B. ethics
C. environmental ombudsman
D. culture
45. The key functional inputs that an organization provides during the transformation of raw
materials into a delivered product or service is referred to as a(n) ______.
A. value chain
B. transformation process
C. organizational culture
D. operational ethics
46. A(n) _____ is composed of the key functional inputs that an organization provides in the
transformation of raw materials into a delivered product or service.
A. value chain
47. ______ can be defined as the values, beliefs, and norms shared by all the competitors and
A. Value chain
B. Transformation process
C. Organizational culture
D. Operational ethics
3-7
48. All of the following are key functions of an organization except:

A. Sales
B. Information systems
C. Marketing
D. R&D
49. The ______ represents the sum of all the policies and procedures from each of the
A. value chain
C. culture
50. Which of the following serves as a support line function to key functional areas in an
organization's value chain?
A. Advertising
B. Manufacturing
C. Human resources management
D. Customer service
51. From an ethical perspective, employees in each functional line area face ethical challenges
and dilemmas that ______.
A. are common to the organization as a whole
B. are unique to their departmental responsibilities
C. are common to the industry
D. can be both unique to their departmental responsibilities and common to the whole
organization
52. The R&D department of an organization ______.

A. is responsible mainly for updating current products offered by the organization
B. has a minute impact on the success of the organization
C. carries the responsibility for the future growth of the organization
D. is the most important department of the organization
3-8
53. In the R&D department, ______ is the ideal.

A. higher product quality
B. better, cheaper, faster
C. uniqueness
D. cheaper
54. ______ is the real ethical dilemma faced by the R&D department.
A. Product costs
B. Product quality
C. Production time
D. Product originality
55. Marketers see themselves as providing products (or services) to customers who ______.
A. are induced to buy products they don't really need
B. have a potential desire to purchase those products
C. think they need the newest products on the market
D. have already expressed a need for and a desire to purchase those products
56. Marketers play the customer service card, and therefore argue that, since their customers
are satisfied, the outcome justifies the methods used to achieve it, no matter how misleading
the messages or how unnecessary the product sold. This argument represents a ______ view
of ethics.
A. utilitarianism
B. universal ethics
C. descriptive
D. normative
57. The code of ethics adapted by the _____ speaks about doing no harm, fostering trust, and
improving "customer confidence" in the integrity of the marketing exchange system.
A. American R & D Association
B. HR Professionals of America
C. American Marketing Association
D. Marketers' Ethics Resource Center
3-9
58. ______ refers to the actions placed within a strictly moral context instead of basing
actions on the needs of the particular situation.
A. Moral obligation theory
B. Utilitarianism
C. Freudian theory
D. Universal ethics
59. ______ refers to the actions that are taken out of duty and obligation to a purely moral
ideal, rather than based on the needs of the situation, since the principles are seen to apply to
everyone, everywhere, and all the time.
B. Utilitarianism
C. Freudian theory
D. Universal ethics
60. Marketing professionals abide by a code of ethics adapted by the _____________.

A. Society for Marketing Resources
B. American Marketing Association
C. American Ethics Association
61. Ideally, the human resources function within an organization should be directly involved
in all of the following except:
A. the creation of a career development program for the employee
B. the creation of the job description for the position
C. the marketing of the organization's products
D. the documentation of periodic performance reviews
3-10
62. If an employee leaves a company, the ________ department should host an exit interview
to ensure that anything the organization can learn from the departure is fed back into the
A. R & D
B. Marketing
C. Accounting
D. HR
63. If an employee and company eventually part ways, the HR department should do all of the
following except:
A. hire the next available candidate.
B. provide a referral letter to the unemployment office.
C. host an exit interview.
D. ensure that anything learned from an employee's departure is utilized in the strategic plan
for future company growth and development.
64. The ______ Department should be at the center of any corporate code of ethics.
A. Finance
B. HR
C. Marketing
D. Manufacturing
65. Advocates of ethical business conduct argue that the HR department needs to ensure that
all of the following critical areas are addressed except:
A. HR must keep track of all of the company's financial transactions
B. HR professionals must help ensure that ethics are a top priority
C. HR is responsible for ensuring that the right programs and policies are in place
D. HR must stay abreast ethical issues
3-11
66. _______ is the function that keeps track of company financial transactions by
documenting money coming in and going out and by balancing the accounts at the end of the
period.
A. Auditing function
B. Compliance function
C. Accounting function
D. Finance function
67. The certification of an organization's financial statements or books as being accurate by an

impartial third-party professional refers to the _______.
A. auditing function
B. compliance function
C. accounting function
D. finance function
68. A set of _________ governs the accounting profession.

A. Generally Accepted Accounting Principles
B. United States Accounting Principles
C. International Financial Principles
D. Corporate Ethical Principles
69. Illegal accounting practices include all of the following except:

A. Taking questionable deductions
B. Overvaluing assets
C. Deferring receipts from one quarter to the next to manage tax liabilities
D. Underreporting income for tax purposes
70. The last resort for ethical guidance is the Code of Ethics issued by the ______.
A. International Association of Certified Public Accountants
B. Certified Public Accountants Association
C. Accounting Institute of Ethical Conduct
D. American Institute of Certified Public Accountants
3-12
71. A situation where one relationship or obligation places you in direct conflict with an
existing relationship or obligation defines a _______.
A. relational conflict
B. conflict of interest
C. ethical ambiguity
D. value chain
72. When a company considers the possibility that what is best for their shareholders, such as
increased profits, may not be best for their employees and the community if the most efficient
means to achieve those increased profits is to close their factory and move production
overseas. This is an example of a ______.
D. value chain
73. According to the NBES, the most often observed misconduct observed by employees was
A. misreporting of actual time worked
B. abusive or intimidating behavior toward employees
C. lying to employees and customers
D. a situation that placed employee interests over organizational interests
74. What is the number one reason explaining why employees stretch the truth in the
workplace?
A. Acceptance by co-workers
B. Profits
C. Investor relations
D. Stakeholder relations
3-13
Fill in the Blank Questions
75. An organization's _________________________ consists of the values, beliefs, and

norms shared by all of the employees of that organization.
________________________________________
76. The key functional inputs that an organization provides during the transformation of raw
materials into a delivered product or service is referred to as a ________________________.
________________________________________
77. Organizational ____________________ can be defined as the values, beliefs, and norms
shared by all the competitors and employees of that organization.
________________________________________
78. The _____________ department of an organization carries the responsibility for the future
growth of the organization.
________________________________________
79. Product ______________________ is the real ethical dilemma faced by the R&D
department.
________________________________________
80. Marketers play the customer service card, and therefore argue that, since their customers
are satisfied, the outcome justifies the methods used to achieve it, no matter how misleading
the messages or how unnecessary the product sold. This argument represents a
________________ view of ethics.
________________________________________
3-14
81. The code of ethics adapted by the American _____________________________ speaks

about doing no harm, fostering trust, and improving "customer confidence" in the integrity of
the marketing exchange system.
________________________________________
82. Marketing professionals abide by a code of ethics of the

____________________________.
________________________________________
83. ______________________ ethics refers to the actions placed within a strictly moral
context instead of basing actions on the needs of the particular situation.
________________________________________
84. The ______________ Department should be at the center of any corporate code of ethics.
________________________________________
85. The _______________________ function keeps track of company financial transactions

by documenting money coming in and going out and by balancing the accounts at the end of
the period.
________________________________________
86. The certification of an organization's financial statements or books as being accurate by an

impartial third-party professional refers to the _____________________ function.
________________________________________
87. A set of __________________________________________ governs the accounting

profession.
________________________________________
3-15
88. The last resort for ethical guidance is the Code of Ethics issued by the
______________________________________.
________________________________________
Essay Questions
89.
Identify and discuss the key and supporting functions of a company's value chain.
90. Discuss the responsibility and potential ethical dilemmas associated with Manufacturing.
91. Discuss the responsibility and potential ethical dilemmas associated with the Research and
Development Department.
3-16
92. Discuss the responsibility and potential ethical dilemmas associated with the Marketing
Department.
93. Discuss the belief that HR should be at the center of any corporate code of ethics.
94. Describe the auditing function of an organization.
95. Discuss the pressures placed on an organization's Accounting Department to maintain

creative bookkeeping techniques.
3-17
96. Discuss conflict of interest. Give an example and discuss the example.
3-18
Chapter 003 Organizational Ethics Key
True / False Questions
1. (p. 44) An organization's operating culture is a sum of all the policies and procedures, both
written and informal.
TRUE
Bloom's: Remembering
Difficulty: Easy
Learning Outcome: 3.1
2. (p. 44) Only shareholders have a vested interest in the ethical performance of an organization.
FALSE
Other parties (the stakeholders) have a vested interest in the ethical performance of an
organization.
Difficulty: Easy
3. (p. 44) Organizational culture can be defined as the values, beliefs, and norms shared by all
the competitors and employees of that organization.
FALSE
Organizational culture can be defined as the values, beliefs, and norms shared by all the
Difficulty: Medium
3-19
4. (p. 44) The culture represents the sum of all the policies and procedures from each of the
TRUE
Difficulty: Medium
5. (p. 44) A value chain is composed of the key functional inputs that an organization provides
in the transformation of raw materials into a delivered product or service.
TRUE
Difficulty: Medium
6. (p. 44) Finance and marketing are key functions in a value chain.
FALSE
Traditionally, these key functions are identified as: Research and development (R&D),
Manufacturing, Marketing (and advertising), Sales, and Customer service.
Difficulty: Medium
7. (p. 44) Finance and marketing are line functions, supporting each of the key functional areas.
TRUE
Difficulty: Easy
3-20
8. (p. 44) Human resources management supports each of the functional areas in a value chain.
TRUE
Difficulty: Easy
9. (p. 44) R&D professionals carry the responsibility for the future growth of the organization.
TRUE
Difficulty: Easy
10. (p. 45) Given that R&D does not interact directly with customers, the potential for ethical
dilemmas is nonexistent.
FALSE
R&D teams incorporate customer feedback from market research, and each area can face
ethical challenges and dilemmas that can be both unique to their departmental responsibilities.
Bloom's: Understanding
Difficulty: Medium
11. (p. 45-46) Product quality is the real ethical dilemma that R&D professionals face.
TRUE
Difficulty: Easy
3-21
12. (p. 45-46) Human Resource Managers carry the responsibility for the future growth of the
organization.
FALSE
R&D professionals carry the responsibility for the future growth of the organization.
Difficulty: Easy
13. (p. 46-47) The manufacturing process is responsible for ensuring that the product reaches the
hands of a satisfied customer.
FALSE
The marketing process is responsible for ensuring that the product reaches the hands of a
satisfied customer.
Difficulty: Easy
14. (p. 47) Marketers see themselves as providing products (services) to customers who have
already expressed a need for and a desire to purchase those products.
TRUE
Difficulty: Easy
3-22
15. (p. 47) Universal ethics refer to the ethical choices that offer the greatest good for the
greatest number of people.
FALSE
Utilitarianism refers to ethical choices that offer the greatest good for the greatest number of
people.
Difficulty: Easy
16. (p. 47) Universal Ethics are actions performed out of duty and obligation to a purely moral
ideal, rather than based on the needs of the situation, since the universal principles are seen to
apply to everyone, everywhere, all the time.
TRUE
Difficulty: Easy
17. (p. 47) The actions taken out of duty and obligation to a purely moral ideal refers to
utilitarianism.
FALSE
Universal Ethics are actions performed out of duty and obligation to a purely moral ideal.
Difficulty: Easy
18. (p. 48) Marketing professionals abide by a code of ethics adapted by the American
Marketing Association.
TRUE
Difficulty: Easy
3-23
19. (p. 48) The code of ethics adapted by the American Marketing Association speaks about
doing no harm, fostering trust, and improving "customer confidence" in the integrity of the
marketing exchange system.
TRUE
Difficulty: Easy
20. (p. 48) Even with the code of ethics adapted by the AMA, the question remains as to whether
or not encouraging people to buy things they don't need is truly an ethical process.
TRUE
Difficulty: Medium
21. (p. 49) If an employee leaves a company, the HR department should host an exit interview to
ensure that anything the organization can learn from the departure is fed back into the
TRUE
Difficulty: Easy
22. (p. 49) The human resources function within an organization does not need to be directly
involved in the relationship between the company and the employee, such as with the
documentation of periodic performance reviews.
FALSE
The human resources function within an organization needs to be directly involved in the
relationship between the company and the employee.
Difficulty: Medium
3-24
23. (p. 50) Advocates of ethical business conduct argue that HR should be at the center of any
corporate code of ethics.
TRUE
Difficulty: Easy
24. (p. 50) Advocates of ethical business conduct argue that HR should be at the center of and
the sole creator of any corporate code of ethics.
FALSE
Advocates of ethical business conduct argue that HR should not be the sole creator of the code
since it is a document that should represent the entire organization, but certainly as the voice
of reason in ensuring that all the critical areas are addressed.
Difficulty: Medium
25. (p. 50) Marketing is responsible for ensuring that the right programs and policies on ethical
FALSE
HR professionals are responsible for ensuring that the right programs and policies on ethical
Difficulty: Medium
26. (p. 50) HR professionals must help ensure that ethics is a top organizational priority.
TRUE
Difficulty: Easy
3-25
27. (p. 50) HR must stay abreast of ethics issues, and in particular, the changing legislation and
sentencing guidelines for unethical conduct.
TRUE
Difficulty: Easy
28. (p. 50-51) The finance function of an organization can be divided into two distinct areas:
financial transactions and the accounting function.
FALSE
The finance function of an organization can be divided into three distinct areas: financial
transactions, accounting, and auditing.
Difficulty: Medium
29. (p. 50) The auditing function keeps track of all the company's financial transactions by
end of the period.
FALSE
The accounting function keeps track of all the company's financial transactions by
end of the period.
Difficulty: Medium
3-26
30. (p. 50) The accounting function is the certification of an organization's financial statements
as being accurate.
FALSE
The auditing function is the certification of an organization's financial statements, or "books,"

as being accurate by an impartial third-party professional.
Difficulty: Easy
31. (p. 51) Internal auditors provide counsel for improving controls, processes and procedures,
performance, and risk management.
TRUE
Difficulty: Easy
32. (p. 52) The accounting profession is governed by a set of laws and established legal
precedents.
FALSE
The accounting profession is not governed by a set of laws and established legal precedents
but by a set of generally accepted accounting principles, typically referred to as GAAP.
Difficulty: Easy
33. (p. 52) GAAP are accepted principles utilized as standard operating procedures within the
industry.
TRUE
Difficulty: Easy
3-27
34. (p. 52) GAAP, like any operating standard, are open to interpretation and abuse.
TRUE
Difficulty: Easy
35. (p. 52) Corporations try to manage their expansion at a steady rate of growth.
TRUE
Difficulty: Easy
36. (p. 52) When corporations grow too quickly or steadily from year to year, investors may see
them as in danger of falling behind their competition.
FALSE
If corporations grow too slowly or too erratically from year to year, investors may see them as
unstable or in danger of falling behind their competition.
Difficulty: Medium
37. (p. 52) It is legal to defer receipts from one quarter to the next to manage your tax liability.
TRUE
Difficulty: Easy
3-28
38. (p. 52-53) A set of accurate financial statements that present an organization as financially
stable, operationally efficient, and positioned for strong future growth can do a great deal to
enhance the reputation and goodwill of an organization.
TRUE
Difficulty: Medium
39. (p. 53) When a company's financial statements have been certified by an objective third
party to be "clean," that certification is meant to be for the company's benefit.
FALSE
That certification is meant to be for the public's benefit rather than the company's.
Difficulty: Medium
40. (p. 54) A situation where one relationship or obligation places you in direct conflict with an
existing relationship or obligation refers to value chain interest.
FALSE
A conflict of interest is a situation in which one relationship or obligation places you in direct
conflict with an existing relationship or obligation.
Difficulty: Medium
41. (p. 54) Selling a product that has the potential to be harmful to your customers represents a
conflict of interest.
TRUE
Difficulty: Medium
3-29
42. (p. 55) According to the Ethics Resource Center, the most frequently observed misconduct
by employees was lying to employees, customers, vendors, or the public.
FALSE
According to the Ethics Resource Center, types of misconduct that employees observed most
include abusive or intimidating behavior toward employees, and next, lying to employees,
customers, vendors, or the public.
Difficulty: Easy
43. (p. 55) Profits are the main reason behind stretching the truth and bending the rules on a
regular occurrence in the workplace.
TRUE
Difficulty: Easy
Multiple Choice Questions
44. (p. 44) An organization's ______ consists of the values, beliefs, and norms shared by all of
the employees of that organization.
A. external culture
B. ethics
C. environmental ombudsman
D. culture
Difficulty: Easy
3-30
45. (p. 44) The key functional inputs that an organization provides during the transformation of
raw materials into a delivered product or service is referred to as a(n) ______.
A. value chain
Difficulty: Medium
46. (p. 44) A(n) _____ is composed of the key functional inputs that an organization provides in
the transformation of raw materials into a delivered product or service.
A. value chain
Difficulty: Medium
47. (p. 44) ______ can be defined as the values, beliefs, and norms shared by all the employees
of that organization.
A. Value chain
B. Transformation process
C. Organizational culture
D. Operational ethics
Difficulty: Easy
3-31
48. (p. 44) All of the following are key functions of an organization except:
A. Sales
B. Information systems
C. Marketing
D. R&D
Difficulty: Medium
49. (p. 44) The ______ represents the sum of all the policies and procedures from each of the
A. value chain
C. culture
Difficulty: Easy
50. (p. 44) Which of the following serves as a support line function to key functional areas in an
organization's value chain?
A. Advertising
B. Manufacturing
C. Human resources management
D. Customer service
Difficulty: Easy
3-32
51. (p. 45) From an ethical perspective, employees in each functional line area face ethical
challenges and dilemmas that ______.
A. are common to the organization as a whole
B. are unique to their departmental responsibilities
C. are common to the industry
D. can be both unique to their departmental responsibilities and common to the whole
organization
Difficulty: Easy
52. (p. 45) The R&D department of an organization ______.

A. is responsible mainly for updating current products offered by the organization
B. has a minute impact on the success of the organization
C. carries the responsibility for the future growth of the organization
D. is the most important department of the organization
Difficulty: Medium
53. (p. 46) In the R&D department, ______ is the ideal.

A. higher product quality
B. better, cheaper, faster
C. uniqueness
D. cheaper
Difficulty: Easy
3-33
54. (p. 46) ______ is the real ethical dilemma faced by the R&D department.
A. Product costs
B. Product quality
C. Production time
D. Product originality
Difficulty: Easy
55. (p. 47) Marketers see themselves as providing products (or services) to customers who
______.
A. are induced to buy products they don't really need
B. have a potential desire to purchase those products
C. think they need the newest products on the market
D. have already expressed a need for and a desire to purchase those products
Difficulty: Medium
56. (p. 47) Marketers play the customer service card, and therefore argue that, since their
customers are satisfied, the outcome justifies the methods used to achieve it, no matter how
misleading the messages or how unnecessary the product sold. This argument represents a
______ view of ethics.
A. utilitarianism
B. universal ethics
C. descriptive
D. normative
Difficulty: Medium
3-34
57. (p. 48) The code of ethics adapted by the _____ speaks about doing no harm, fostering trust,
and improving "customer confidence" in the integrity of the marketing exchange system.
A. American R & D Association
B. HR Professionals of America
C. American Marketing Association
Difficulty: Easy
58. (p. 47) ______ refers to the actions placed within a strictly moral context instead of basing
actions on the needs of the particular situation.
B. Utilitarianism
C. Freudian theory
D. Universal ethics
Difficulty: Medium
59. (p. 47) ______ refers to the actions that are taken out of duty and obligation to a purely
moral ideal, rather than based on the needs of the situation, since the principles are seen to
apply to everyone, everywhere, and all the time.
B. Utilitarianism
C. Freudian theory
D. Universal ethics
Difficulty: Easy
3-35
60. (p. 47) Marketing professionals abide by a code of ethics adapted by the _____________.
A. Society for Marketing Resources
B. American Marketing Association
C. American Ethics Association
Difficulty: Easy
61. (p. 49) Ideally, the human resources function within an organization should be directly
involved in all of the following except:
A. the creation of a career development program for the employee
B. the creation of the job description for the position
C. the marketing of the organization's products
D. the documentation of periodic performance reviews
Difficulty: Medium
62. (p. 49) If an employee leaves a company, the ________ department should host an exit
interview to ensure that anything the organization can learn from the departure is fed back
into the company's strategic plan for future growth and development.
A. R & D
B. Marketing
C. Accounting
D. HR
Difficulty: Medium
3-36
63. (p. 49) If an employee and company eventually part ways, the HR department should do all
of the following except:
A. hire the next available candidate.
B. provide a referral letter to the unemployment office.
C. host an exit interview.
D. ensure that anything learned from an employee's departure is utilized in the strategic plan
for future company growth and development.
Difficulty: Medium
64. (p. 50) The ______ Department should be at the center of any corporate code of ethics.
A. Finance
B. HR
C. Marketing
D. Manufacturing
Difficulty: Easy
65. (p. 50) Advocates of ethical business conduct argue that the HR department needs to ensure
that all of the following critical areas are addressed except:
A. HR must keep track of all of the company's financial transactions
B. HR professionals must help ensure that ethics are a top priority
C. HR is responsible for ensuring that the right programs and policies are in place
D. HR must stay abreast ethical issues
Difficulty: Medium
3-37
66. (p. 50) _______ is the function that keeps track of company financial transactions by
documenting money coming in and going out and by balancing the accounts at the end of the
period.
A. Auditing function
B. Compliance function
C. Accounting function
D. Finance function
Difficulty: Easy
67. (p. 50) The certification of an organization's financial statements or books as being accurate
by an impartial third-party professional refers to the _______.
A. auditing function
B. compliance function
C. accounting function
D. finance function
Difficulty: Easy
68. (p. 52) A set of _________ governs the accounting profession.

A. Generally Accepted Accounting Principles
B. United States Accounting Principles
C. International Financial Principles
D. Corporate Ethical Principles
Difficulty: Easy
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69. (p. 52) Illegal accounting practices include all of the following except:
A. Taking questionable deductions
B. Overvaluing assets
C. Deferring receipts from one quarter to the next to manage tax liabilities
D. Underreporting income for tax purposes
Difficulty: Medium
70. (p. 53) The last resort for ethical guidance is the Code of Ethics issued by the ______.
A. International Association of Certified Public Accountants
B. Certified Public Accountants Association
C. Accounting Institute of Ethical Conduct
D. American Institute of Certified Public Accountants
Difficulty: Easy
71. (p. 54) A situation where one relationship or obligation places you in direct conflict with an
existing relationship or obligation defines a _______.
D. value chain
Difficulty: Easy
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72. (p. 54) When a company considers the possibility that what is best for their shareholders,
such as increased profits, may not be best for their employees and the community if the most
efficient means to achieve those increased profits is to close their factory and move
production overseas. This is an example of a ______.
D. value chain
Difficulty: Medium
73. (p. 55) According to the NBES, the most often observed misconduct observed by employees
was
A. misreporting of actual time worked
B. abusive or intimidating behavior toward employees
C. lying to employees and customers
D. a situation that placed employee interests over organizational interests
Difficulty: Easy
74. (p. 55) What is the number one reason explaining why employees stretch the truth in the
workplace?
A. Acceptance by co-workers
B. Profits
C. Investor relations
D. Stakeholder relations
Difficulty: Easy
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Fill in the Blank Questions
75. (p. 44) An organization's _________________________ consists of the values, beliefs, and
norms shared by all of the employees of that organization.
culture
Difficulty: Easy
76. (p. 44) The key functional inputs that an organization provides during the transformation of
raw materials into a delivered product or service is referred to as a
________________________.
value chain
Difficulty: Medium
77. (p. 44) Organizational ____________________ can be defined as the values, beliefs, and
norms shared by all the competitors and employees of that organization.
culture
Difficulty: Easy
78. (p. 45) The _____________ department of an organization carries the responsibility for the
future growth of the organization.
R&D
Difficulty: Medium
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79. (p. 46) Product ______________________ is the real ethical dilemma faced by the R&D
department.
quality
Difficulty: Easy
80. (p. 47) Marketers play the customer service card, and therefore argue that, since their
customers are satisfied, the outcome justifies the methods used to achieve it, no matter how
misleading the messages or how unnecessary the product sold. This argument represents a
________________ view of ethics.
utilitarianism
Difficulty: Medium
81. (p. 48) The code of ethics adapted by the American _____________________________
speaks about doing no harm, fostering trust, and improving "customer confidence" in the
integrity of the marketing exchange system.
Marketing Association
Difficulty: Easy
82. (p. 47) Marketing professionals abide by a code of ethics of the

____________________________.
American Marketing Association
Difficulty: Easy
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83. (p. 47) ______________________ ethics refers to the actions placed within a strictly moral
context instead of basing actions on the needs of the particular situation.
Universal
Difficulty: Medium
84. (p. 50) The ______________ Department should be at the center of any corporate code of
ethics.
HR
Difficulty: Easy
85. (p. 50) The _______________________ function keeps track of company financial
transactions by documenting money coming in and going out and by balancing the accounts at
the end of the period.
accounting
Difficulty: Easy
86. (p. 50) The certification of an organization's financial statements or books as being accurate
by an impartial third-party professional refers to the _____________________ function.
auditing
Difficulty: Easy
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87. (p. 52) A set of __________________________________________ governs the accounting

profession.
Generally Accepted Accounting Principles
Difficulty: Medium
88. (p. 53) The last resort for ethical guidance is the Code of Ethics issued by the
______________________________________.
American Institute of Certified Public Accountants
Difficulty: Easy
Essay Questions
89. (p. 44-45)

Identify and discuss the key and supporting functions of a company's value chain.
Key functions: Research and Development (R&D), Manufacturing, Marketing, Sales, and
Customer Service; Supporting functions: Human Resources Management, Finance,
Information Systems, and Management.
Difficulty: Difficult
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90. (p. 46) Discuss the responsibility and potential ethical dilemmas associated with
Manufacturing.
pressures here are very similar to those in the R&D function as manufacturers face the ethical
question, "Do you want it built fast, or do you want it built right?" Obviously, from an
organizational perspective, you want both, especially if you know that your biggest
competitor also is racing to put a new product on the market (and if it gets there before you
do, all your sales projections for your product will be worthless). Here again, you face the
ethical challenges inherent in arriving at a compromisewhich corners can be cut and by
how much. You want to build the product to the precise design specifications, but what if
there is a supply problem? Do you wait and hold up delivery, or do you go with an alternative
(and less reliable) supplier? Can you be sure of the quality that alternative supplier will give
you?
91. (p. 46) Discuss the responsibility and potential ethical dilemmas associated with the
Research and Development Department.
The Research and Development Department (R&D) carries the responsibility for the future
growth of the organization by developing new products to sell. R&D teams incorporate
feedback from various sources to develop a product design that, hopefully, will allow the
organization to capture and maintain a leading position in its market. Designing a task that
does not meet the manufacturing cost figures needed to sell the product at a required profit
margin can create ethical dilemmas. If "better, cheaper, faster" is the ideal, then compromises
in functionality or manufacturing to meet a targeted cost figure must be made. For an R&D
team, the real ethical dilemmas come when making decisions about product quality.
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92. (p. 47) Discuss the responsibility and potential ethical dilemmas associated with the
Marketing Department.
From an ethical standpoint, these opposing arguments can be seen to line up with distinct
ethical theories. Marketers emphasize customer service and argue that since their customers
are satisfied, the good outcome justifies the methods used to achieve that outcome no matter
how misleading the message or how unnecessary the product sold.
93. (p. 50) Discuss the belief that HR should be at the center of any corporate code of ethics.
1) HR professionals must help ensure that ethics is a top organizational priority; 2) HR must
ensure that the leadership selection and development processes include an ethics component;
3) HR is responsible for ensuring that the right programs and policies are in place; 4) HR must
stay abreast of ethics issues (and in particular the changing legislation and sentencing
guidelines for unethical conduct).
Difficulty: Easy
94. (p. 51) Describe the auditing function of an organization.
After balancing an organization's financial statements, these statements must be reported to

numerous interest parties. For small businesses, the most important customers are government
agencies. In addition, leaders and creditors are required to use an impartial third-party source
to certify the accuracy of these financial statements. Auditors typically certified professional
accountants and/or audit specialists can provide this certification.
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95. (p. 52-53) Discuss the pressures placed on an organization's Accounting Department to
maintain creative bookkeeping techniques.
Corporations try to manage their expansion at a steady rate of growth. If they grow too slowly
or too erratically from year to year, investors may see these groups as unstable or in danger of
falling behind the competition. If corporations grow too quickly, investors may develop
unrealistic expectations of future growth. This "inflated" outlook can have a devastating effect
on a corporation's stock price if quarterly numbers are not met. Investors have shown a pattern
of overreacting to bad news by dumping their stock.
96. (p. 52-53) Discuss conflict of interest. Give an example and discuss the example.
A situation in which one relationship or obligation places you in direct conflict with an
existing relationship or obligation.
3-47

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Chapter 003 Organizational Ethics

True / False Questions

2. Only shareholders have a vested interest in the ethical performance of an organization.

6. Finance and marketing are key functions in a value chain.

30. The accounting function is the certification of an organization's financial statements as

35. Corporations try to manage their expansion at a steady rate of growth.

Multiple Choice Questions

48. All of the following are key functions of an organization except:

52. The R&D department of an organization ______.

53. In the R&D department, ______ is the ideal.

60. Marketing professionals abide by a code of ethics adapted by the _____________.

67. The certification of an organization's financial statements or books as being accurate by an

68. A set of _________ governs the accounting profession.

69. Illegal accounting practices include all of the following except:

Fill in the Blank Questions

75. An organization's _________________________ consists of the values, beliefs, and

81. The code of ethics adapted by the American _____________________________ speaks

82. Marketing professionals abide by a code of ethics of the

85. The _______________________ function keeps track of company financial transactions

86. The certification of an organization's financial statements or books as being accurate by an

87. A set of __________________________________________ governs the accounting

94. Describe the auditing function of an organization.

95. Discuss the pressures placed on an organization's Accounting Department to maintain

True / False Questions

The auditing function is the certification of an organization's financial statements, or "books,"

Multiple Choice Questions

52. (p. 45) The R&D department of an organization ______.

53. (p. 46) In the R&D department, ______ is the ideal.

68. (p. 52) A set of _________ governs the accounting profession.

Fill in the Blank Questions

82. (p. 47) Marketing professionals abide by a code of ethics of the

87. (p. 52) A set of __________________________________________ governs the accounting

89. (p. 44-45)

94. (p. 51) Describe the auditing function of an organization.

After balancing an organization's financial statements, these statements must be reported to

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