Enron's problem with related-party transactions breached the assumption of:
A)going concerns
B)arm's-length transactions
C)freedom of enterprise
D)market stability

Question

Quizplus · Accepted Answer

Enron's problem with related-party transactions breached the assumption of arm's-length transactions, which refers to the expectation that all transactions between related parties should be conducted on a fair and equitable basis, as though they were conducted with unrelated parties. Enron engaged in transactions with entities that it controlled or had a significant financial interest in, while at the same time negotiating the transactions on the behalf of itself and its shareholders. This resulted in a conflict of interest, and the transactions were not conducted at arm's length.

Enron's Problem with Related-Party Transactions Breached the Assumption Of