Enron Corporation Filed for Bankruptcy Following a Number of Revelations

question 96

Multiple Choice

Enron Corporation filed for bankruptcy following a number of revelations about its accounting procedures.Enron used a complex structure of corporations and off-the-books debt to mask its true financial picture from the markets.When asked about the propriety of Enron's reporting methods,many analysts have responded,"They simply did what most corporations do." Their comments:

• A)reflect analysis under the Nash model.
• B)reflect analysis under the Blanchard/Peale model.
• C)reflect rationalization.
• D)reflect Wall Street Journal analysis.
• E)none of the above

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Definitions:

Balance Sheet

A financial statement that reports a company's assets, liabilities, and shareholders' equity at a specific point in time, providing a snapshot of its financial condition.

Accounts Payable

Obligations a company must settle with lenders or suppliers within a short timeframe, often within a year.

Accounts Receivable

Funds that customers owe to a company for products or services that have been provided but not yet compensated for.

Wages Expense

An accounting term for the total cost incurred by a company to compensate its employees, shown on the income statement.