Enron's Use of Special Purpose Entities Led To

question 5

Multiple Choice

Enron's use of Special Purpose Entities led to:

• A) Widespread, and wholly unexpected, embezzlements of funds
• B) Widespread embezzlements of funds that could had, and should have, been readily anticipated
• C) The accounting profession developing the concept of consolidated financial statements
• D) Rule changes in GAAP

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Definitions:

Industry Factors

Industry factors involve the specific conditions, trends, and influences affecting the performance and profitability of companies within a particular sector.

Net Profit Margin

A profitability ratio calculated by dividing net income by revenue, showing how much of each dollar in revenues results in profit.

Industry-Wide Ratios

Comparative metrics that evaluate the financial health or performance of companies across a specific industry, facilitating benchmarking.

Benchmark

A Benchmark is a standard or point of reference against which things may be compared or assessed.