Arthur Andersen's (The Accounting Firm That Audited Enron's Finances) Failure

question 56

Multiple Choice

Arthur Andersen's (the accounting firm that audited Enron's finances) failure to catch problems at Enron

• A)may have been motivated by future high-revenue consulting services with Enron.
• B)was due to Andersen's inability to hire good talent.
• C)probably was based on restrictive accounting regulations that limit access to information.
• D)was proven to be part of a larger white-collar crime ring.
• E)stemmed from Andersen's interest in Enron's failure.

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Definitions:

Annual Rate

An interest rate calculated for a period of one year, often expressed as a percentage.

Real Wage

The purchasing power of a worker's earnings, adjusted for inflation, reflecting the true value of goods and services that can be bought.

Inflation

How quickly the average cost of products and services climbs, reducing buying power as time progresses.

Expected Inflation

The rate at which the general level of prices for goods and services is anticipated to rise over a specific period.