Which of the Following Is the Main Lesson That Analysts

question 4

Multiple Choice

Which of the following is the main lesson that analysts and investors should take from the cases of Enron and WorldCom?

• A) The usefulness of financial statements to investors is entirely dependent on the ethics of those constructing them.
• B) It is not possible to effectively evaluate a company unless all the financial statements are fully and correctly prepared.
• C) The information in financial statements should be viewed extremely critically.
• D) Readers of even fraudulent financial statements can spot signs of a firm's financial health, if those statements are read fully and with care.

---

Definitions:

Time-Driven Activity-Based Costing

An accounting method that assigns costs to products based on the estimated amount of time activities take and the cost of performing those activities.

Customer Cost Analysis

The process of examining and evaluating the costs associated with acquiring and supporting customers to determine profitability.

Customer Support Department

A division within a company that deals with customer inquiries, issues, and assistance requirements.

Time-Driven Activity-Based Costing

A method of costing that assigns costs to products or services based on the actual time taken to perform specific activities.