Malfeasance at Enron, a Houston-Based Energy Firm, Led to Overstatement

question 334

Multiple Choice

Malfeasance at Enron, a Houston-based energy firm, led to overstatement of revenues by almost $92 billion. As Enron closed its operations, U.S. energy prices remained stable. This may have been evidence that

• A) Enron could charge whatever price it wanted to for energy.
• B) there was lack of any competition, so Enron was the winner.
• C) there is a competitive market in energy distribution in the United States.
• D) the accounting profession needs to review its policies quickly.

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Definitions:

Subsidiary Ledger

A subsidiary ledger is a detailed record that supports the entries recorded in a primary accounting ledger, often used for accounts like accounts payable and receivable.

General Ledger

A comprehensive record containing all financial transactions of a company, used to prepare financial statements.

Accounts Receivable

Money owed to a company by customers for products or services that have been delivered but not yet paid for.

Subsidiary Ledger

A detailed ledger that contains the individual accounts related to a specific main account, such as accounts receivable or accounts payable.