One Way Enron Manipulated Its Financial Statements Was to Sell

question 56

Multiple Choice

One way Enron manipulated its financial statements was to sell assets at inflated prices to other firms, while promising 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 cash raised should have been recorded as short-term loans.
• B)The assets should have been listed on the balance sheet as long-term assets.
• C)Cash raised by selling assets should not be recorded as revenue.
• 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.

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Definitions:

Resistance To Change

Opposition or reluctance to adapt to new procedures, technologies, or conditions within an organization.

Personal And Financial

Relates to aspects concerning an individual’s personal life and financial status, often emphasizing the interconnectedness of personal well-being and economic stability.

Perceptual And Organizational

Refers to how individuals perceive and interpret organizational environments and structures.

Individual And Organizational

Refers to the interaction and relationship between single members and the broader structure, culture, and goals of the organization.