I must "ass" you a question

Josiah is now learning how the world works on the bus.

Here is a following conversation.

Jo:  Mom, what does ass mean?

Me: What?  Repeat that. What did you say?

(couldn't tell if he said ass or ask)

Jo: What does ass mean? You know a-s-s?

Me: Well, (as I nonchalantly get food out of the pantry) it is a donkey.

Jo: No, like butt -ass

Me: Uh, Grant? Did you hear this?

I go talk to Grant, covering up our giggles, while Jo is in his room playing with Legos.

I decided to talk Jo about it.

Me: Where did you hear ass at?

Jo: Certain kid on the bus. (go figure, I knew that was coming)

So what does it mean?

Me: Well, there are bad words and there are cuss words. Bad words are just not nice words to say e.g. stupid, hate.  Cuss words are words that are really bad words that you should never say. Ass can be a cuss word, but the word ass is actually a word for a donkey.

Jo: A bad donkey?

Me: Yes, Some people use the word ass to call someone a name that is acting like a stupid donkey or some people use the word ass as another word for butt. Either way we shouldn't say it or spell it.  

(I remembered how much I liked being able to combine my 2 new skills of spelling and cussing)

After saying the word so many times in a in a couple sentences, it lost its "badness" quickly.

Jo:  Ok, I don't want to talk anymore. I'm bored.

and like that the conversation was over.

So now I must ass you a question.

Do I say something to bus driver or teacher?  

This is the 3rd strike I have against this little boy.  He's the same age of Jo, but has older siblings so the other things haven't been of innocent nature. I also realize the bus and my brother are where I learned most things, so it's inevitably going to happen.