Q.1 Which of the following is a primary ethical responsibility of a management accountant?
Maximizing company profits at any cost
Ensuring accurate and honest financial reporting
Avoiding taxation
Maintaining personal wealth
Explanation - Management accountants are ethically required to provide accurate and honest financial information for informed decision-making.
Correct answer is: Ensuring accurate and honest financial reporting
Q.2 What is the term for avoiding conflict of interest in management accounting?
Integrity
Objectivity
Confidentiality
Competence
Explanation - Objectivity requires management accountants to remain impartial and avoid conflicts of interest when making decisions or reporting information.
Correct answer is: Objectivity
Q.3 Why is confidentiality important in management accounting?
To maintain the secrecy of all company operations
To protect sensitive financial information from unauthorized parties
To hide losses from shareholders
To avoid paying taxes
Explanation - Confidentiality ensures that sensitive financial information is only shared with authorized personnel and is not misused.
Correct answer is: To protect sensitive financial information from unauthorized parties
Q.4 Which ethical principle emphasizes honesty and fairness in accounting?
Integrity
Objectivity
Confidentiality
Professional competence
Explanation - Integrity in accounting requires professionals to be honest, fair, and truthful in all financial reporting and decision-making.
Correct answer is: Integrity
Q.5 A management accountant discovers a minor error that does not affect overall reporting. Ethically, they should:
Ignore it
Correct and report it
Hide it from management
Use it for personal advantage
Explanation - Even minor errors should be corrected and reported to maintain accuracy and trustworthiness.
Correct answer is: Correct and report it
Q.6 Which of the following actions violates the ethical principle of objectivity?
Providing unbiased financial analysis
Accepting gifts from a supplier while auditing them
Reporting all relevant costs
Following standard accounting procedures
Explanation - Accepting gifts can create bias and conflict of interest, violating objectivity.
Correct answer is: Accepting gifts from a supplier while auditing them
Q.7 Professional competence in management accounting refers to:
Maintaining knowledge and skills to perform duties effectively
Maximizing personal benefits
Delegating all responsibilities
Ignoring new accounting standards
Explanation - Competence requires accountants to continually update their skills and knowledge to serve the organization effectively.
Correct answer is: Maintaining knowledge and skills to perform duties effectively
Q.8 Which of the following is NOT considered an ethical obligation of management accountants?
Integrity
Objectivity
Confidentiality
Profit maximization by any means
Explanation - Ethical obligations require honesty and fairness, not achieving profits at any cost.
Correct answer is: Profit maximization by any means
Q.9 If a management accountant is asked to manipulate financial data, the ethical response is to:
Comply silently
Refuse and report the request
Modify only minor figures
Ignore company policies
Explanation - Manipulating data is unethical; accountants must refuse and report unethical requests to maintain integrity.
Correct answer is: Refuse and report the request
Q.10 Ethical management accounting promotes:
Short-term gains
Trust and transparency
Competitive secrecy
Tax evasion
Explanation - Following ethical practices builds trust with stakeholders and ensures transparent financial reporting.
Correct answer is: Trust and transparency
Q.11 Which organization provides a code of ethics for management accountants?
IFAC
IMA
SEC
FASB
Explanation - The Institute of Management Accountants (IMA) provides a professional code of ethics for management accountants.
Correct answer is: IMA
Q.12 Ethical dilemmas in management accounting often arise when:
Personal interests conflict with professional duties
All reports are accurate
Regulations are followed
Management provides sufficient resources
Explanation - Dilemmas occur when accountants face situations where personal gain conflicts with ethical obligations.
Correct answer is: Personal interests conflict with professional duties
Q.13 Management accountants must avoid which of the following to maintain professional ethics?
Following standard procedures
Conflict of interest
Continuous learning
Providing accurate reports
Explanation - Avoiding conflicts of interest ensures objectivity and ethical behavior in accounting practices.
Correct answer is: Conflict of interest
Q.14 Confidentiality in management accounting applies to:
All financial data including personal employee information
Only company profits
Only external reports
Publicly available data
Explanation - Confidentiality requires accountants to protect all sensitive information, including personal and financial data.
Correct answer is: All financial data including personal employee information
Q.15 An ethical management accountant faced with incomplete data should:
Estimate and report
Report data limitations transparently
Ignore missing data
Alter data to fit expectations
Explanation - Transparency about limitations ensures ethical and accurate reporting.
Correct answer is: Report data limitations transparently
Q.16 Integrity in management accounting primarily ensures:
Stakeholder trust and credibility
Tax optimization
Maximum profits
Business expansion
Explanation - Integrity ensures honest and ethical behavior, which builds trust among stakeholders.
Correct answer is: Stakeholder trust and credibility
Q.17 Which of the following is a consequence of unethical behavior in management accounting?
Enhanced reputation
Financial penalties and legal issues
Improved team morale
Increased transparency
Explanation - Unethical practices can lead to fines, legal action, and reputational damage.
Correct answer is: Financial penalties and legal issues
Q.18 Ethical decision-making in management accounting requires:
Ignoring organizational policies
Balancing professional duties, laws, and stakeholder interests
Focusing only on profits
Relying solely on intuition
Explanation - Ethical decisions consider all responsibilities, including professional standards and stakeholder welfare.
Correct answer is: Balancing professional duties, laws, and stakeholder interests
Q.19 Whistleblowing in management accounting is considered ethical when:
It is done for personal gain
It exposes illegal or unethical activities
It violates company policies
It leaks confidential customer data
Explanation - Whistleblowing is ethical when it prevents harm and exposes unethical or illegal practices.
Correct answer is: It exposes illegal or unethical activities
Q.20 Which principle requires management accountants to maintain and improve professional skills?
Integrity
Objectivity
Professional competence
Confidentiality
Explanation - Professional competence ensures accountants stay updated with knowledge and skills required for their roles.
Correct answer is: Professional competence
Q.21 If an accountant is pressured to falsify cost reports, the ethical action is to:
Falsify them to satisfy management
Refuse and document the pressure
Delay the report
Ignore the instruction
Explanation - Refusing to falsify reports and documenting unethical pressures ensures accountability and integrity.
Correct answer is: Refuse and document the pressure
Q.22 Which of the following is considered unethical in management accounting?
Providing truthful financial reports
Misrepresenting expenses to reduce taxes illegally
Reporting operational inefficiencies
Keeping sensitive data confidential
Explanation - Deliberate misrepresentation for personal or organizational gain violates ethical standards.
Correct answer is: Misrepresenting expenses to reduce taxes illegally
Q.23 Ethics in management accounting contributes to:
Better decision-making and organizational sustainability
Short-term profit only
Concealing losses from shareholders
Ignoring regulatory compliance
Explanation - Ethical practices improve reliability of data, stakeholder trust, and long-term sustainability.
Correct answer is: Better decision-making and organizational sustainability
Q.24 A management accountant should disclose information to external parties only when:
It benefits the accountant personally
It is required by law or authorized by management
The data is incomplete
It improves company reputation
Explanation - Disclosure must follow legal and organizational guidelines to maintain confidentiality and ethics.
Correct answer is: It is required by law or authorized by management
Q.25 Which ethical principle ensures that financial data is not misused for personal gain?
Integrity
Confidentiality
Objectivity
Professional competence
Explanation - Confidentiality protects sensitive information from misuse and unauthorized access.
Correct answer is: Confidentiality