What is the primary aim of ethical principles in accounting?
Maintain financial integrity
Accountants are accountable to stakeholders such as investors, creditors, and the public
Adhering to ethical standards in accounting contributes to the integrity of the financial system.
True
What is a conflict of interest in accounting?
Conflicting personal interests
Compliance issues arise when deciding whether to report unethical or illegal activities
Resolving ethical dilemmas in accounting requires considering responsibilities to stakeholders.
True
Professional judgment is essential for ethical decision-making in accounting.
True
Match the factor contributing to ethical dilemmas with its description:
Conflicting Interests ↔️ Accountant's personal or professional goals conflict with ethical duties
Pressure from Management ↔️ Demand to misrepresent or conceal unfavorable data
Lack of Clear Guidance ↔️ Ambiguity in accounting standards or policies
Ethics in accounting involves adhering to a set of principles and moral standards that guide accountants in making honest and fair decisions
Ethical principles in accounting ensure the accuracy and transparency of financial data.
True
Why is ethical adherence crucial in accounting?
Maintains trust
Match the ethical dilemma with its description:
Conflict of Interest ↔️ Personal interests clash with professional duties
Pressure to Misrepresent Data ↔️ Management demands concealment of unfavorable information
Confidentiality Breaches ↔️ Unauthorized disclosure of sensitive data
Disclosing client information without authorization is a breach of confidentiality.
True
What are the core ethical principles tested by accounting dilemmas?
Integrity, objectivity, confidentiality
What is the impact of conflicting interests on accountants?
Compromises integrity
Ambiguity in accounting standards can lead to a lack of clear guidance
How does management pressure affect accountants?
Compromises integrity
Ethics in accounting involves adhering to principles and moral standards to make honest and fair decisions
Sticking to ethical standards can maintain transparency and accountability to stakeholders.
True
A conflict of interest arises when an accountant's personal or professional interests conflict with their duty to provide objective and impartial financial information
Unethical choices by accountants can lead to a loss of trust, damaged reputation, and public outrage
Match the stakeholder with the impact of ethical financial reporting:
Investors ↔️ Protects their interests
Creditors ↔️ Ensures responsible lending
Employees ↔️ Promotes trust and security
The public ↔️ Upholds financial integrity
What is the impact of accurate financial reporting on investors?
Protects their interests
What is the dual aim of ethical principles in accounting?
Integrity and accountability
What is the ethical dilemma of compliance issues in accounting?
Reporting illegal activities
Facing pressure to misrepresent financial data is an ethical dilemma for accountants.
True
What is the term for disclosing sensitive client information without authorization?
Confidentiality breach
Steps to resolve ethical dilemmas in accounting
1️⃣ Identify the dilemma
2️⃣ Analyze ethical principles
3️⃣ Evaluate consequences
4️⃣ Make a decision
Pressure from management is a common factor that can lead to ethical dilemmas in accounting, compromising their integrity
A lack of clear guidance in accounting standards can contribute to ethical dilemmas.
True
Match the ethical framework with its focus:
Utilitarianism ↔️ Maximizing well-being
Rights-based approach ↔️ Respecting individual rights
Virtue ethics ↔️ Accountant's moral character
Fairness or Justice approach ↔️ Ensuring impartial treatment
What is the primary focus of the utilitarianism framework in ethical decision-making?
Overall well-being
The Fairness or Justice approach in ethical decision-making emphasizes equitable treatment for all stakeholders.