One Way Enron Manipulated Its Financial Statements Was to Sell

question 107

Multiple Choice

One way Enron manipulated its financial statements was to sell assets at inflated prices to other firms,while giving a promise to buy back those assets at a later date.The incoming cash was recorded as revenue,but the promise to buy back the assets was not disclosed.Which of the following is one of the ways that such a transaction is deceptive?

• A)The assets should have been listed on the balance sheet as long-term assets.
• B)Cash raised by selling assets should not be recorded as revenue.
• C)The cash raised should have been recorded as short-term loans.
• D)The off balance sheet promises to repurchase assets should have been disclosed in management discussion and analysis (MD&A)or notes to the financial statement.
• E)The promise to buy back the assets should have been listed under accounts payable.

---

Definitions:

Negative Feedback

A regulatory mechanism in which a stimulus causes an opposing output in order to maintain an ideal level of whatever is being regulated.

Calcium Ion

A vital mineral in the body, serving important roles in cellular signalling, muscle function, and bone health.

Respiratory System

The complex network of organs and structures responsible for the intake of oxygen and the exhalation of carbon dioxide in living organisms.

Blood pH

The measure of acidity or alkalinity of the blood, with a normal range for human blood typically between 7.35 and 7.45, indicating a slightly alkaline state.