8. One way Enron manipulated its financial statements was to sell assets at infl

Question

8. 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 way that such a transaction is deceptive? a. The assets should have been listed on the balance sheet as long term assets. b. The cash raised should have been recorded as short-term loans 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 or notes to financial statement.

Explanation / Answer

c. Cash raised by selling assets should not be recorded as revenue

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