The Litmus Test of a Company's Code of Ethics Is

question 67

Multiple Choice

The litmus test of a company's code of ethics is

• A)the degree to which it is connected to a company's statement of core values.
• B)the extent to which it is embraced in crafting strategy and in the day-to-day operations of the business.
• C)the extent to which a company's approach to ethical behavior mirrors the ethical principles for society at large.
• D)based on the rules a company's top management and board of directors make about "what is right" and "what is wrong."
• E)determined by the ethical behaviors expected of company personnel in the course of doing their jobs.

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Definitions:

Long-lived Assets

Assets expected to provide economic benefits over a period longer than one year, such as buildings, machinery, and equipment.

Capitalizes Expenditures

The process of recording a cost as an asset, rather than an expense, to be written off over the future period.

Rate-of-Return Comparisons

A method of evaluating the profitability of different investments by comparing their rates of return.

Operating Cycles

The period of time it takes for a business to purchase or create inventory, sell the products, and collect cash from the sales.