Which of the Following Was Not a Technique Used by Enron

question 15

Multiple Choice

Which of the following was not a technique used by Enron to manage earnings?

• A) Used reserves to increase earnings when reported amounts were too low
• B) Deliberately overstated the allowance for uncollectibles and adjusted it downward in future years
• C) Used mark-to-market estimates to inflate earnings in violation of GAAP
• D) Selected which operating assets to "sell" to the SPEs, affecting the gain on transfer and earnings effect

---

Definitions:

Standard Machine-Hours

A measure of manufacturing time that is expected to be used, based on a standard rate of output per machine.

Manufacturing Overhead

All indirect costs associated with manufacturing, excluding direct labor and direct materials. This includes expenses such as utilities and rent for the manufacturing facilities.

Direct Labor Costs

Expenses associated with employees who are directly involved in the production of goods or services.

Actual Hours

Refers to the real amount of time spent on a task or activity, as recorded or reported.