FP II 1.02 Test

Because Maggie's primary goal is to get ahead in the company, she often uses questionable tactics to get a sale, which sometimes involves misleading her customers. Maggie's behavior is a risk to her employer because Maggie places more importance on personal gain than she does on:

• business ethics

• her productivity

• social responsibility

• operating procedures

Which is an unethical activity that relates to risk management?

• issuing bonds to raise funds for a corporation

• withholding information from insurance underwriters

• requesting various documents to process a loan request

• using third-party debt collectors to obtain overdue payments

Which is a potential negative consequence for a business which fails to manage risk by implementing an ethics training program for all employees?

• Increased conflict

• damaged reputation

• reduced profit margins

• decincreased salary expense

Without ethical standards, risk management activities can sometimes occur:

• rarely

• illegally

• at the expense of other people

• without a strong leader in place

A health food company claims that its products will cure many diseases, but without proof of this claim. When customers realized that the claim was unfounded, the company suffered from a damaged reputation and many lawsuits. The company's behavior is considered to be:

• favorable

• Moral

• normal

• unethical

Michelle has acquired proof that her coworker Ted has been embezzling money from the company. If Michelle fails to inform her employer about Ted's activities, what will likely occur?

• Ted will be charged with a felony

• The company financial risk will increase

• The company's property insurance premium will increase

• The government will fine the company for non complaiance

Emma is reviewing the sales budget in relation to the actual sales generated for a set time frame. Emma is using financial information in this situation to:

• identify external economic trends.

• analyze the impact of aging accounts.

• establish new quality standards and benchmarks.

• compare estimated performance with actual performance.

One goal of risk management is to

• limit losses

• increase expenses

• increase employee loyalty

• determine right from wrong

To guard against intentional ethical violations, such as deliberate financial data tampering, an organization should maintain:

• daily balance sheets

• audit trails of data changes

• hard copies of all documents

• an accounts receivable schedule

To save money, an automobile manufacturer imported substandard parts resulting in engine fires. The manufacturer is now facing a class-action lawsuit which is an example of a risk associated with:

• trade secrets

• service quality

• product safety

• domestic trade