BUSINESS ETHICS

F 1. Business is a passive process.

F 2. Tax preparation is more difficult in a sole proprietorship than in a corporation.
T 3. A corporation is a separate entity distinct from all the owners.
T 4. Your liability as a shareholder is only limited to the amount of your investment.
F 5. A partnership may generate funds through selling shares of stocks.
F 6. A corporation may be owned by one person.
F 7. Handling money for a sole proprietorship is easier than partnership.
T 8. Book stores and sari-sari stores fall under the service businesses category.
F 9. Manufacturing businesses include baked goods and cosmetics.
T 10. The sole proprietor can pass the business down to his/her heir.
F 11. A sole proprietorship needs higher start-up costs.
T 12. Partnership business lacks formality compared with managing a limited
company or corporation.
T 13. Profit is the difference between the amount received and the amount spent on
something purchased, produced, or manufactured.
F 14. Merchandising businesses turn basic inputs into products which are sold
to consumers.
T 15. In a sole proprietorship, the owner decides alone

A business is an active process which is an integral part of human society.

The term profit refers to the difference between the amount received and the amount spent on
something purchased, produced, or manufactured.

Service businesses provide services to customers rather than products.

Examples: computer repair, laundry services, tutoring, delivery services,
wellness (such as gym or spa), etc.
Merchandising businesses sell to customer’s products they buy from other
businesses.
Examples: sari-sari stores, bookstores, department stores, groceries,
supermarkets, etc.
Manufacturing businesses turn basic inputs into products which are sold to
consumers.
Examples: shoe manufacturing, baked goods, candle manufacturing,
cosmetics manufacturing, wine production, etc.
Forms of Business Organizations
1. Sole Proprietorship- It is a one-person business. The owner has full control over
the finances and operations and decides alone.
Advantages:
a. Tax preparation is faster. Simply file an individual income tax return including
losses and profits to your business. Your personal and business income is
considered the same and the tax implications for self-employed individuals
would apply.
b. Sole proprietorship has lower start-up costs.
c. Handling money for the business is easier.
d. Sole proprietorships have the least government rules and regulations that
affect them.
e. The sole proprietor can own the business for as long as he/she wants, and
when he/she wants to move out, he/she can cash in and sell the business.
f. Even in common practice, the sole proprietor can pass the business down to
his/her heir.
Disadvantages:
a. The sole proprietor is personally liable for all debts and actions of the
enterprise.
b. There is lack of financial control because of looser structure of sole
proprietorship.
c. There could be difficulty in raising capital.

2. Partnership- It is a business relationship between two or more people. It refers to

an arrangement where individuals share a business venture's profits and
liabilities. The partners give feedback on how to use the capital and other critical
strategic decisions that may provide different perspectives.
Advantages:
a. Partnership business lacks formality as compared with managing a limited
company or corporation.
b. It is easy to start. The partnership may be created either verbally or in writing.
c. You share the burden. You have companion and support.
d. Every partner would add his/her own expertise, skills, experience, and
connections to the business, thus giving it a greater chance of success.
e. There is better decision-making. Two heads are better than one.
f. There is privacy. The business deals may be kept confidential by the partners.
g. The partners own and control the business.
h. The more partners there are, the more funds are available in the company,
which can be used for possible expansion. Its borrowing capacity is also likely
to be higher.
i. There is an easy access to profits in a business partnership. The partners just
have to divide the profits.
Disadvantages:
a. The business does not have any independent legal status.
b. The business has no separate legal personality, so the partners are personally
liable for the debts and losses incurred.
c. The partnership business often seems to lack the sense of prestige more
closely associated with a corporation.
d. A partnership will often find it more difficult to raise money than a corporation.
e. There is a potential of differences and conflicts.
f. Decision-making can be slower because there is a need for consultation
among partners.
g. The profit must be shared among the partners.
h. It may require a lot of time and energy thus may affect life-work balance.
i. The profits earned by the partnership will be translated to income on the
individual partners. Thus, they are subject to income tax in the financial year
in which they are made.
j. There are limits on business development like unlimited liability, lack of
funding opportunities, and a lack of commercial status, etc

3. Corporation. It is an entity created by law that is independent and distinct

from its owners and relies on the corporate laws of the state in which it is
incorporated to continue its existence. Corporations have an advantage in
generating money for the company. It can raise funds by selling shares of
stocks. It files taxes separately from its owners.
Advantages:
a. The liability of the shareholders of a corporation is limited up to the amount
of their investments.
b. A publicly held corporation may sell shares or issue bonds to raise substantial
amounts.
c. It is easy for a shareholder to sell shares in a corporation.
d. A corporation’s life has no limit, ownership can pass through many
generations.
Disadvantages:
a. The corporation pays taxes on its income depending on its type and the
shareholders pay dividend taxes, so income gets taxed twice.
b. The management team of a corporation can operate the business without any
real oversight from the owners.
1. It is a business relationship between two or more people.
2. It is operated and owned by one person.
3. It is an independent entity.
4. The individuals agree to share profits and liabilities.
5. It can sell shares of stocks.
6. There is sharing of burden.
7. There could be difficulty in raising capital.
8. The decisions are made by a person alone.
9. It files taxes separately from its owners.
10.The owner controls fully the financial and operational matters.

T 1. A corporation is a separate entity distinct from all the owners.

F 2. Tax preparation is more difficult in sole proprietorship.
F 3. Business is a passive process.
F 4. A partnership may generate funds through selling shares of stocks.
T 5. The liability of a shareholder is only limited to the amount of his/her
Investment.

C 6. Corporation A. It is a business owned by one person only.

A 7. Sole proprietorship B. It is the amount received minus the amount
spent.
D 8. Business C. It is an independent entity distinct from its
owners.
E 9. Partnership D. It involves important operations like
advertising, marketing, etc.
B 10. Profit E. It is a business venture by two or more people.

11. Which is not true of a corporation?

A. The life of a corporation has no limit.
B. The business does not have any independent legal status.
C. The business operates even without any real oversight from
the owners.
D. Corporation files taxes separately from its owners.
12. All of these are advantages of a partnership, except:
A. there is sharing of burden.
B. the partners both own and control the business.
C. there is better decision-making because two heads decide.
D. it has lower start-up cost.
13. Which is not a nature of business?
A. It aims to earn profits.
B. There are four forms of business organization.
C. It is an active process.
D. It involves significant operations such as buying, assembling, etc.
14. Which is not a role of a corporation?
A. Corporation provides benefits such as connections with suppliers, etc.
B. Corporation makes massive quantities of goods.
C. Corporation hires huge number of workers.
D. Corporation finds it difficult to raise capital.
15. The following are the advantages of a sole proprietorship, except:
A. there could be difficulty in raising capital.
B. tax preparation is a lot faster.
C. the sole proprietor can pass the business down to his/her heir.
D. handling money for the business is easier

1. It is the explication and justification process.

A. accountability B. Fairness C. transparency D. efficiency
2. It is giving to a person what is due to him/her.
A. accountability B. fairness C. transparency D. efficiency
3. This act should be done accurately to the company’s investors.
A. hiring B. reporting C. organizing D. auditing
4. This approach makes a person more honest and sincere.
A. accountability B. fairness C. transparency D. efficiency
5. This means that the standard of judging is free from bias.
A. accountability B. fairness C. transparency D. efficiency
Directions: Identify whether the statement is True or False.
T 6. When a manager is not bias, he/she is fair.
F 7. Ted showed transparency when he reimbursed his expenses without showing
official receipts.
T 8. An employee is accountable to pay whatever company property he/she has
damaged or lost.
T 9. Fairness is shown when one listens to the two sides of a story.
T 10. Accountability is shown when one admits his/her mistake and is responsible
for it.
T 11. Betty exercised fairness when she paid the right amount for an item purchased.
F 12. Transparency is shown when the accountant hides the records from the other
shareholders of the company.
T 13. Bobby is exhibiting transparency when he holds an open bidding for
the company’s next project.
T 14. Mina should pay the money collection that she lost in the restaurant, being the
treasurer of the lending company where she works.
F 15. A boss may choose who among his employees will be given 13th month pay
Directions: Match the term in Column A to its definition/description in Column B.
Write only the letter of your answer on a separate sheet of paper.
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D 1. transparency A. It is the explication and justification process.
C 2. reporting B. It is giving to a person what is due to him/her.
B 3. fairness C. This act should be done accurately to the
company’s investors.
E 4. decision-making D. This approach makes a person more
honest and sincere.
A 5. accountability E. An example of this act involves hiring of
workers.
Directions: Complete each sentence below by filling in the blank/s . Choose your
answers from the box and write them on a separate sheet of paper.
Efficiency Fairness Transparency
Bias Accountability
6-8 ______FAIRNESS_______, _________ACCOUNTABILITY________, and
______TRANSPARENCY_________ are the three
important core principles in business organization.
9. _____FAIRNESS____ is shown when one listens to the two sides of a story before
giving his/her judgment.
10. _____ACCOUNTABILITY____ is shown when one admits his/her mistake and is responsible
for it.
Directions: Read each sentence carefully and identify whether it is correct or
incorrect. Write your answers on a separate sheet of paper.
CORRECT 11. One exercises fairness when he/she pays the right amount for an item
purchased.
INCORRECT 12. Transparency is shown when one hides the records from the other
shareholders of the company.
CORRECT 13. Bong is exhibiting transparency when he holds an open bidding for
company’s next project.
CORRECT 14. Lito should pay the money collection which he lost in the restaurant, being
the treasurer of the lending company where he works.
INCORRECT 15. A boss may choose who among his/her employees will be given Christmas
Bonus
D 1. Ethical Issues in Production A. Tasks include hiring and performance
evaluation
C 2. Ethical Issues in Sales and B. Tasks involve trading practices
Marketing and conditions, and tax payments
B 3. Ethical Issues in Finance C. Tasks involve protection of consumers
and honesty in delivery
A 4. Ethical Issues in Human D. Task includes that its products do not
Resource Management inflict unnecessary harm

A. Ethical Issues in Production

B. Ethical Issues in Sales and Marketing
C. Ethical Issues in Finance
D. Ethical Issues in Human Resource Management

D 5. XYZ Company does not accept members of LGBTQIA+ community.

A 6. Reggie’s hotdogs are made under strict processing standards.
C 7. The company supervisor orders office supplies from her husband’s store.
B 8. Wyn Mobile, a new brand of computer, launched its new laptops at an
overpriced amount.
D 9. Marigold Enterprise rejects differently abled applicants.
A 10.Energybest Milk does not put on the can’s label the ingredients they used.
A 11.The food products of XYZ Corporation are well-sealed.
C 12.The administrative manager joins the contract bidding of their proposed
new building.
C 13.Mr. Reyes, the accountant, bribed the personnel to reduce their company’s
tax payable.
B 14. Cherry Beverages hired a famous commercial model for its
product promotion.
B 15. Choco mucho Manufacturing Corporation delivers its products on time

Definition of Ethics
The term Ethics is derived from the Greek word ethos which means
“characteristic way of thinking”. Ethics, as a science, does not only evaluate the
morality of our human conduct but also provides us with a common understanding
of the universal, objective, and irreversible moral principles that should govern us
human behavior and guide our moral decisions (Roa, 2011).
Ethics are moral principles that guide the conduct of the individual (Racelis,
2017). These are rules of behavior based on ideas about what is morally good and
bad (Merriam-Webster Dictionary).
1. Ethical Issues in Finance
Under the umbrella of finance and accounting, fairness in trading
practices, trading conditions, financial contracting, sales practices,
consultancy services, tax payments, internal audits, external audits, and
executive compensation are included, whereas specific corporate ethical/legal
abuse includes insider trading, bribery/kickbacks, misleading financial
analysis, and fraud on securities.
2. Ethical Issues in Human Resource (HR) Management
Human Resource Management 's tasks include hiring and orientation,
performance evaluation, training and development, labor relations, and health
and safety concerns. Among the ethical issues are discrimination by age (the
young ones are preferred over the older ones), gender preference, sexual
orientation, race, ethnicity, disability, and physical appearance are all ethical
issues that the HR oversees.
3. Ethical Issues in Sales and Marketing
Marketing ethics deals with the beliefs, standards and/or morals that
advertisers and marketing organizations will operate upon. Ethical marketing
issues include promotion of obsolete or harmful products/services; openness
about environmental threats; food ingredients (Genetically Modified
Organisms); possible health hazards or financial risks; protection for the
privacy and autonomy of consumers; truthfulness in advertising; and honesty
in price and delivery. Some claim that advertisements can affect the views of
individuals and their relationships with others, suggesting an ethical
obligation to avoid distorting those expectations and relationships.
4. Ethical Issues in Production
Business ethics typically deals with company's duties to ensure its
goods and industrial procedures do not inflict unnecessary harm. Many
products and services can be generated and used at zero risk and it can be
difficult to assess the ethical path. However, there are consumers who
patronize products that damage them, for example, tobacco products. Output
can have adverse effects on the environment like air pollution, destruction of
habitats, and urban sprawl.

1. As an office employee, you need to _____.

a. wears the prescribed office uniform
b. wear something you are comfortable with
2. With the “No Smoking” policy of the company, Elvis, being a smoker, _____.
a. will not follow because it makes him uncomfortable
b. will follow because it could irritate the people around him
3. In observing the office hour, I _____.
a. will report to my workplace before the time
b. will report any time I want, anyway there is salary deduction
What is Code of Ethics?
Code of Ethics is a set of rules about good and bad behavior. It is a guide of principles designed to help
professionals conduct business honestly and with integrity. A code of ethics document may outline the
mission and values of the business or organization, how professionals are supposed to approach
problems, the ethical principles based on the organization's core values, and the standards to which the
professional is held

Code of Ethics contains the following:

1. Vision means something that you imagine; a picture that you see in your
mind (Merriam-Webster Dictionary). The vision statement helps to ensure
the alignment of the decisions to the company goals.
Example: To make innovations that everyone could access and adapt
depending on their needs
2. Values (value means something thought of as important or useful)
Values in business help to ensure that all of the employees work towards
the company goals.
Example: We commit ourselves to serve our customers with quality
service and utmost respect.
3. Mission- a specific task with which a person or a group is charged
(Merriam-Webster Dictionary). The mission statement clearly and
effectively guides the business or the organization in its decision-making.
Example: To inspire all the young athletes of the country… tell them to
dream and go for it!
4. Principles- moral rules or beliefs that help you know what is right and
wrong and that influence your actions (Merriam-Webster Dictionary).
Examples:
Customers have to be respected.
Make sure to deliver quality product

YES 1. The company’s Board of Trustees should show perseverance.

NO 2. It does not matter whether the decision is fair to all or not.
YES 3. Social surveys should be carried out by the company.
NO 4. The company may not fully review the offenses reported.
YES 5. Each member of the organization should be fully aware of the company’s
principles.
YES 6. The owner’s decision should be based on truth.
NO 7. Do not mind immoral activities in the company.
YES 8. The management should protect the whistleblowers.
YES 9. The decision should build goodwill of the organization.
NO 10. Ethics are social principles that guide the conduct of the individuals.
Directions: Complete each statement by filling the appropriate word in the blank.
Write your answers on a separate sheet of paper.
GOOD AND BAD 11-12 Code of Ethics is a set of rules about _____ and _____ behavior.
DISCIPLINARY 13. The possibility of giving _____ action often minimize doing offensive behavior.
WHISTLEBLOWERS 14. The people who detect illegal activities and report the same to proper
authorities
are called _____.
EXAMPLES 15. It is highly suggested that administrators should lead by ____

1. Socrates (469-399 BCE)- “The Gad-fly at the Marketplace” is one of the few
individuals whom one could say have shaped the cultural and intellectual
development of the world for without him, history would be profoundly different.
This is Socrates’s philosophical idea:
“The unexamined life is not worth living.” Socrates pointed out that human
choice was motivated by the desire for happiness.
Socrates thought of the Entrepreneurs. The Socratic Method is a way of
thinking that allows individuals to define their own purpose of learning and
exploring its purpose through open-minded questioning of what they hold to be
true. Socrates insisted on a right to think of ourselves by introducing the
philosophical concept, “Dare to Disagree”.
2. Plato – “The Philosopher-King” is one of the world’s best known and most
widely read and studied philosophers. He was the student of Socrates and the
teacher of Aristotle. He wrote in the middle of the 4th Century BCE in ancient
Greece. This is Plato’s philosophical idea:
“Good people do not need laws to tell them to act responsibly, while bad
people will find a way around the laws.”
Plato maintains a virtue-based eudemonistic conception of ethics. That is to
say, happiness or well-being (eudaimonia) is the highest aim of moral thought and
conduct, and the virtues (aretê: excellence) are the requisite skills and dispositions
needed to attain it.
3. Aristotle – “All or Nothing” (384-322 BCE) is a towering figure in ancient
Greek philosophy, contributing to logic, metaphysics, mathematics, physics,
biology, ethics, politics, agriculture, medicine, dance, and theater. These are
some of Aristotle’s philosophical ideas:
“Happiness is the meaning and the purpose of life, the whole aim, and end of
human existence.”
“Let people seek fulfillment.”
The word happiness in ethics is a translation of the Greek term “eudaimonia”
which connotes success and fulfillment. For Aristotle, this happiness is our highest
goal. In relation to business, Aristotle concludes that the role of the leader is to
create an environment in which all members of an organization can realize their
potential.
4. Immanuel Kant (1724–1804). “Duty based Ethics”. He is one of the most
influential philosophers in the history of Western Philosophy. He was not
concerned with the consequences of one’s actions or the harm caused to one’s
individual interests. Instead, he is focused on motives and the willingness of
individuals to act for the good of others, even if the action might result to
personal loss. Doing something for the right reason was more important to Kant
than any particular outcome.
For example, business ethics is littered with cases of companies that have
suffered damaging crises due to their leaders’ lack of commitment to act based on
goodwill and about what benefits others.
5. Jeremy Bentham and John Stuart Mill- “Utilitarianism” revolves around the
concept of “the end justifies the means”. It believes that outcomes, as a result of
an action has a greater value compared to the latter.
Utilitarianism is a philosophy or belief suggesting that an action is morally
right when the majority of people benefit from it. Also, the doctrine that an action is
right as it promotes happiness, and that the greatest happiness of the greatest
number should be the guiding principle of conduct. Utilitarianism is a moral theory
that advocates actions that promote overall happiness or pleasure and reject
actions that cause unhappiness or harm. A utilitarian philosophy, when directed to
making social, economic, or political decisions, aims for the betterment of society.

D____11. Motives and the willingness of individuals to act for the good of others, even
though that action might result to personal loss.
A____12. The role of the leader is to create an environment in which all members of
an organization can realize their own potential.
B____13. Happiness or well-being is the highest aim of moral thought and conduct.
E____14. Utilitarianism is a moral theory that advocates actions that promote overall
happiness or pleasure and rejects actions that cause unhappiness or harm.
C____15. We have the right to think of ourselves.