The issue lies in the fact that US Generally Accepted Accounting Principles “provides that the assets and liabilities of an SPE do not need to appear on the balance sheet of the vendor company which has set it up” (Deakin, Konzellman, 2004) this allowed for Enron to set up multiple companies into which it could hide debt from investors... Showed first 250 characters
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A former employee states in an interview on the documentary “Enron: the Smartest Guys in the Room” that “ Enron loved these deals because they produce cash but don’t have to show the debt on the balance sheet” (Enron: The Smartest Guys in The Room). This evidence highlights the unethical use of SPE’s that Enron chose to adopt in the preparation of its financial statements... Showed next 250 characters
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overview of accounting
The basic understanding of accounting is broken up into two major categories, assets and liabilities. Assets are items in a company that are for the positive, these include cash, equipment, buildings and land are assets for a company...
1. The audit report is not dated. The audit report date should be the last day of the
2. The balance sheet is as of a particular date , whereas the income statement and the
statement of retained earnings are for a period of time...
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Enron & SOX
October 12, 2007
Assignment #5, SOX
SOX: The Sarbanes-Oxley Act of 2002 was signed into federal law in July 2002. It is commonly knows as SOX and was a result of the majoring accounting and corporate scandals, including Enron and WorldCom...
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Over View Of Accounting
Financial reports are a necessary tool used by investors and potential investors to see how a company functions and stands financially. It is a deciding factor in what and how much will an investor invest in a company...
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Enron undertook some creative accounting schemes to avoid reporting its increasing losses and also to give the appearance of rapid earnings growth. For example, they claimed that contracts due in the future were worth more than they actually were...
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Financial Analysis of Real & Virtual Companies
ZeroMillion.com, 2006, states
The Current Ratio is one of the best known measures of financial strength. It is figured as shown below:
Current Ratio = Total Current Assets / Total Current Liabilities
A generally acceptable current ratio is 2 to 1...