Which of the Following Was Not a Technique Used by Enron

question 15

Multiple Choice

Which of the following was not a technique used by Enron to manage earnings?

• A) Used reserves to increase earnings when reported amounts were too low
• B) Deliberately overstated the allowance for uncollectibles and adjusted it downward in future years
• C) Used mark-to-market estimates to inflate earnings in violation of GAAP
• D) Selected which operating assets to "sell" to the SPEs, affecting the gain on transfer and earnings effect

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Definitions:

Coefficient of Determination

A measure, often represented as R^2, that quantifies the proportion of the variance in the dependent variable that is predictable from the independent variable(s).

Variance

A measure of how far individual numbers in a dataset are from the mean, squared.

Correlation Coefficient

A statistical measure that calculates the strength and direction of a linear relationship between two variables, ranging from -1 to +1.