Enron’s bankruptcy was one of the largest bankruptcy cases that the United States has ever seen. This paper will include a brief history on the Enron case and talk about some of the ethical issues that caused Enron to go bankrupt. It will also include information on the companies that were an integral part of Enron’s demise and the Sarbanes-Oxley Act that was formed due to Enron’s unethical practices.
Bankruptcy - the state of being completely lacking in a particular quality or value.
Audit -- a careful review of financial records to verify their accuracy
Balance sheet -- a statement of the financial position of a company at a single specific time (often at the close of business on the last day of the month, quarter, or year.) The balance sheet normally lists all assets on the left side or top while liabilities and capital are listed on the right side or bottom. The total of all numbers on the left side or top must equal or balance the total of all numbers on the right side or bottom. A balance sheet balances according to this equation: Assets = Liabilities + Capital.
Liabilities -- amounts owed by a company to others. Current liabilities are those amounts due within one year or less and usually include accounts payable, accruals, loans due to be paid within a year, taxes due within a year, and so on. Long-term liabilities normally include the amounts of mortgages, bonds, and long-term loans that are due more than a year in the future.
Summary of Enron
Enron was formed in 1985 as an energy trader and supplier after a merger between Huston Natural Gas and InterNorth . Enron set up several special purpose limited liability entities that allowed the company to hide its liabilities and ...
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Ferrell, O. C., Fraedrich, J., & Ferrell, L. (2013). Part 5. In Business ethics: Ethical decision making and cases (9th ed., pp. 395-405). Mason, OH: South-Western/Cengage Learning.
Wang, X. (2012, April 29). The Fall of Enron-An Analysis of Ethical Issues | wxiaom's blog. Retrieved from http://blogs.bgsu.edu/wxiaom/2012/04/29/the-fall-of-enron-an-analysis-of-ethical-issues/
Wire Reports (2002, July 24). 7 banks found to help Enron disguise debt - baltimoresun.com. Retrieved from http://www.baltimoresun.com/business/bal-bz.banks24sjul24,0,1845364.story#ixzz2ltVUozc5
Folger, J. (2011, December 1). The Enron Collapse: A Look Back. Retrieved November 28,
2013, from http://www.investopedia.com/financial-edge/1211/the-enron-collapse-a-look-
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