$1.$ Which ethical principle would Mark violate if he intentionally misrepresents the

company$$s financial statements?

a$)$ Objectivity

b$)$ Professional Competence

c$)$ Integrity

d$)$ All of the above

$2.$ Which accounting principle is MOST at risk of being violated if revenue is recognized

before services are performed?

a$)$ Matching Principle

b$)$ Historical Cost Principle

c$)$ Revenue Recognition Principle

d$)$ Full Disclosure Principle

$3.$ How would extending the useful life of assets affect the financial statements?

a$)$ Net income would increase due to lower depreciation expense.

b$)$ Total assets would decrease.

c$)$ Net income would decrease due to higher depreciation expense.

d$)$ Cash flow from operating activities would decrease.

$4.$ What is the potential consequence of deferring expenses to the next fiscal year?

a$)$ It artificially inflates profits in the current year.

b$)$ It violates the Going Concern Principle.

c$)$ It has no impact on financial statements.

d$)$ It reduces net income in the current year.

$5.$ Which of the following is a potential legal consequence of falsifying financial

statements?

a$)$ Civil lawsuits from investors

b$)$ Fines and penalties from the SEC

c$)$ Criminal charges, including imprisonment

d$)$ All of the above

$6.$ What is the best course of action for Mark based on professional ethical standards?

a$)$ Follow the CEO$$s request to protect his job.

b$)$ Make the adjustments but include a footnote explaining them.

c$)$ Refuse to make unethical changes and report the issue to the audit committee.

d$)$ Resign immediately and stay silent.

$7.$ What role do external auditors play in this scenario?

a$)$ They ensure financial statements comply with accounting standards.

b$)$ They make management decisions about financial reporting.

c$)$ They approve all accounting adjustments suggested by the CEO.

d$)$ They focus only on tax compliance, not financial reporting.

$8.$ Why might the CEO be pressuring Mark to adjust the financial statements?

a$)$ To ensure compliance with accounting regulations

b$)$ To increase the company's reported earnings and attract investors

c$)$ To reduce company expenses in the long term

d$)$ To improve internal controls