Business Ethics, 8e Jennings
UNIT FOUR – ETHICS AND COMPANY CULTURE
True/False Questions
the costs from an insurer is unethical.
turn to external avenues.
company.
concerns that remain unresolved.
through the lines of authority.
conduct.
General.
disclosures.
an ethical violation.
se.
Business Ethics, 8e Jennings
disclosure of study results harmful to the company and its products would be unethical.
to say nothing and ignore the situation.
agree to do it but remind him that I can’t make it a habit.
F 31. Both the director of general accounting and the controller at WorldCom were comfortable
with capitalizing ordinary expenses.
forbidden from talking with Arthur Andersen auditors.
capitalizing ordinary expenses served prison time.
entities.
another.
Business Ethics, 8e Jennings
relieved of contract obligations.
based on these earnings must forfeit them.
officers.
a financial reporting officer.
made up of independent members so long as the majority of the board is independent.
penalty.
boards because of attorney-client privilege.
ethical missteps by Andersen.
announced inspection is both illegal and unethical.
a judgment call and not an ethical issue.
Business Ethics, 8e Jennings
suggested that you ship out enough goods to meet the quarterly goals by simply
overshipping quantities on customer orders. When the goods are returned, you would
simply take the returns in the next quarter after you have had more of an opportunity to
meet goals. Your assistant’s suggestion is a breach of ethics.
always engaged in this form of earnings shifting. The practice is still an ethical breach.
engaged in unethical behavior.
nothing unethical.
Business Ethics, 8e Jennings
test scores were manipulated.
application consultant.
exceptions and approaches a hotel builder to lease space for her clothing store in his
new hotel while his application for zoning and construction are pending has done nothing
unethical.
Multiple Choice Questions
1. Mother Teresa is an example of which category of moral development?
2. Andrew Fastow is an example of which category of moral development?
3. What is managerial ambivalence?
4. Which of the following does Saul Gellerman believe is ineffective for preventing company ethical
lapses?
5. A bad barrel refers to:
6. An employee who falsified sales figures at his company explained, “I felt I had no choice.” The
employee’s conduct is best explained by:
7. “What were they smoking?”, was a Fortune headline that referred to:
8. Jerome Kerviel, Joseph Jett, and Nick Leeson had what in common?
9. What defense did Jerome Kerviel, Joseph Jett, and Nick Leeson share?
10. Which of the following is prohibited conduct with respect to stock options?
11. In the Bank of America case, former general counsel Timothy Mayopoulos was meeting with the
Board of Bank of America:
12. Following his meeting with the board of Bank of America, general counsel Timothy Mayopoulos:
13. Which of the following was the focus of the Bank of America and Mayopoulos‘ dust-up during the
Merrill Lynch acquisition?
14. The SEC and Bank of America reached a settlement over charges the SEC brought related to
Bank of America’s acquisition of Merrill Lynch:
15. In the Bank of America/Merrill Lynch acquisition case, a federal judge blocked further action by
the company:
16. In the Bausch & Lomb case, which of the following was not a technique of the sales force used to
meet their numbers?
17. Ronald Zarrella, the CEO of Bausch & Lomb in 2000, had to apologize for what?
18. What explanation did Krispy Kreme offer for not meeting its earnings targets in 2004?
19. Which of the following are more likely to break the law?
20. How were the workers at Westland/Hallmark Meat Company compensated?
21. What term did the Westland/Hallmark Meat Company employees have to use in their processing
work?
22. Lehman Brothers (now bankrupt) was able to use an accounting strategy kno wn as Repo 105 to
spin debt off its books so that it appeared to be less leveraged than it was. Which of the following
is correct?
23. Where was Bernie Madoff’s secretive operation that had his computer and program for his
investment techniques?
24. Which of the following individuals knew nothing about Bernie Madoff’s Ponzi scheme?
25. Who was trying to have an investigation into Madoff’s operation launched as of 2005?
26. What is the length of Mr. Madoff’s sentence?
27. Which was not a business pressure Beech-Nut was feeling at the time of the juice controversy?
28. How far below market price were Interjuice’s prices?
29. Who is Jerome LiCari?
30. What were the rumors around the industry about the concentrate products?
31. Who is Lavery?
32. What was Lavery told in 1978 about the concentrate?
33. What was Lavery’s first step in dealing with the concentrate issues?
34. When was the hold-harmless agreement signed?
35. When is it legal under federal law to sell a product that tastes like apple juice but is not apple
juice?
36. What was the standard Lavery imposed for changing the supplier?
37. Who is Charles Jones?
38. Who was criticized for being “Chicken Little” and “not a team player”?
39. Who was criticized for being “colored by naiveté and impractical ideals”?
40. Who is Nils Hoyvald?
41. When Beech-Nut’s CEO became aware of the problems with its juice supplier, he:
42. Who wrote the “Johnny Appleseed” letter to the FDA?
43. What did the FDA mean by saying that Beech–Nut played a “cat and mouse game” with the
government?
44. Who is Thomas Ward?
45. Who is Zeev Kaplansky?
46. How many felony counts did Beech-Nut plead guilty to?
47. What was the former Beech–Nut CEO’s sentence?
48. What was Beech–Nut’s fine?
49. In the NASA Challenger case, what company built the rocket boosters?
50. Who was the engineer who wrote an internal memo on his concerns about the use of the rocket
launchers in low temperatures?
51. The CEO of NASA:
52. How many people were fired following the Challenger explosion?
53. Who was urged to take off his engineering hat and put on his management hat?
54. Which of the following is not an option for whistleblowers?
55. In the Beech-Nut case, the executives at the time of the sales of adulterated apple juice:
56. Who gave the famous “Numbers Game” speech?
57. Which is not a physical technique for managing earnings?
58. EBITDA is an acronym for:
59. Materiality:
60. Another name for large-charge restructuring is:
Business Ethics, 8e Jennings
61. Soft charges or anticipated costs:
62. Which of the following are used to smooth out earnings?
63. Pro forma numbers are:
64. Non-GAAP measures can be helpful:
65. Provide the accounting for the following:
Operating Revenues: $10,000,000
Nonrecurring, non-operating gain: $4,000,000
Nonrecurring, non-operating loss: $8,000,000
Operating expenses: $6,000,000
66. Who testified before Congress on the importance of ethics in business?
67. When did questions about FINOVA’s numbers first arise?
68. What happened to FINOVA’s share price when it announced a write–down of a loan and the
retirement of Sam Eichefeld as CEO?
69. How low did FINOVA’s share price dip?
70. How did Bausch & Lomb compete with itself?
71. Which of the following has not been an issue for Bausch & Lomb?
72. How were Bausch & Lomb sales affected by its product recall in 2005?
73. Where was Enron incorporated?
74. What did the sign in Enron’s lobby read?
75. What type of revenues are reported using mark–to-market accounting?
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76. What did Ken Lay do when Bethany McLean was researching Enron?
77. What was Jeffrey Skilling’s opinion of Bethany McLean?
78. What was Jeffrey Skilling’s opinion of Jim Chanos?
79. What happened when John Olson issued a skeptical report on Enron?
80. What are SPEs?
81. How many off-the-book entities had Enron created?
82. How much debt did Enron really have?
83. How much debt did Enron disclose?
Business Ethics, 8e Jennings
84. Who of the following did business with Enron?
85. What reason did Ken Lay give for Jeffrey Skilling’s departure from Enron?
86. Who was the CFO of Enron?
87. Who said “Some would say the house of cards are falling”?
88. Who is Sherron Watkins?
89. What happened to Andrew Fastow?
90. What happened to Ken Lay?
91. What happened to Cliff Baxter?
Business Ethics, 8e Jennings
92. How much were Enron board members paid?
93. Who said, “We are on the side of angels”?
94. How much did Enron’s creditors receive?
95. Who sold blocks of Enron stock in August and September 2001?
96. Who said, “I am incredibly nervous that we will implode in a wave of accounting scandals”?
97. How many years was Jeffrey Skilling sentenced to?
98. What happened to Mr. Skilling’s case on appeal?
99. Who of the following people from Enron are still living as of 2010?
Business Ethics, 8e Jennings
100. Who said, “I considered [quitting] on a number of occasions. I was very well compensated. I
didn’t have the nerve to quit”?
101. Who said, “I wish on my kids’ lives I would have stepped up and walked away from t he table that
day”?
102. Who said, “My actions caused my wife to go to prison”?
103. What job did Bernie Ebbers hold while he was in Canada?
104. What would be the final merger for WorldCom?
105. What was WorldCom’s risk in relation to Mr. Ebbers’ personal loans?
106. How much did the WorldCom board loan Ebbers?
107. Which earnings management tool did WorldCom use?
108. Who objected to WorldCom’s practice of capitalizing ordinary expenses?
109. Who received the longest sentence in prison for their crimes?
110. The WorldCom board:
111. Which were not problems that resulted from WorldCom’s high level of mergers?
112. What happened to WorldCom when its accounting issues and restatements were announced?
113. What was the total figure for WorldCom’s earnings restatement?
114. What assets were the Ebbers permitted to keep when the court seized property to pay Ebbers’
fines?