Does my dog know right from wrong?
In a word: no, your dog does not know right from wrong. It is easy to believe that a dog who has destroyed the house or the back yard while you are out knows that she has been naughty, because she looks so guilty when you arrive home and see the mess! But what you think is guilt is actually anxiety and maybe fear: she has learnt that when you come home and say ‘Oh no, Rosie, what have you done? You bad dog!', it's not good news for her. Maybe you will show her the mess and shout at her or, worse still, hit her. She has no way of knowing why she is being reprimanded, unless you happened to catch her in the act of destroying something. If your punishments come more than a second or two after her actions, she can't connect the two things. For her, your punishments are coming out of the blue, for no reason at all. Hence her anxiety and fear (which may look like guilt).
Rather than knowing the difference between right and wrong, dogs know the difference between safe and unsafe. Your dog might learn that it is safe to steal food from the coffee table when no-one is watching, but it is not so safe to do it when someone is around. A dog who is not yet completely housetrained might learn that it is safe to make a puddle behind the couch, where she can't be seen, but very unsafe to do the same thing in the middle of the loungeroom in front of you. This is one reason for not punishing your dog for house soiling; she will just learn to hide from you when she needs to ‘go' because you act in a scary way and are not safe to be around if she makes a puddle when you are there. Your relationship with your dog is not going to be happy and trusting if your dog learns to feel unsafe with you.
Forget about all the Lassie films you have seen and face the fact that dogs have no morals: they don't know right from wrong. That's not to say that they're not adorable - they're just different from humans. It's our job to teach them, using kind and humane methods, which behaviours are acceptable to us and which are not.