Presentation is loading. Please wait.

Presentation is loading. Please wait.

Enron, WorldCom, Global Crossings, Etc.

Published byPamela Kappel Modified over 6 years ago

Similar presentations

Presentation on theme: "Enron, WorldCom, Global Crossings, Etc."— Presentation transcript:

1 Enron, WorldCom, Global Crossings, Etc.
Prepared by Rick Antle

2 Implement this Basic Picture
Wealth (Balance Sheet) Wealth (Balance Sheet) Wealth (Balance Sheet) Time Income (Income Statement) Income (Income Statement)

3 How We Do It Economic concepts Accounting conventions
Ideas that form the foundation of financial reporting. Accounting conventions To implement those ideas by setting the criteria for: Recognition, classification and valuation. Institutional context Incentives, enforcement environment, etc. that affect what people will do.

4 Economic Concepts - Deceptively Simple
Entity Whose accounts are they? Wealth Value of assets minus liabilities Income Change in wealth, excluding contributions of and distributions to owners

5 Accounting Conventions
Recognition How and what do we include in the accounting? Classification Where do we put it? Valuation What numbers do we use?

6 WorldCom A large telecommunications company
Paid fees ($3.8 billion) to access other carriers’ networks Did they… Incur an expense that should reduce income, or Buy an asset?

7 It Depends Were future benefits acquired?
If not, there is no asset Are those future benefits likely to be realized? If uncertainty is large enough, no asset will be recognized

8 Use WorldCom to Highlight Timing Effects
Balance Sheet Balance Sheet Made an asset here Balance Sheet Time Income Statement Kept an expense off here Income Statement Would have been amortized here (and later)

9 Enron There is an easily overlooked part of the basic picture: The entity Accounting takes a point of view: The owners of the entity Example: You deposit money in a bank For you, it is an asset For the bank, it is a liability

10 Enron Basics: Debt Enron Enron Corp JEDI 1 Different companies?
Creditors Enron Corp JEDI 1 Loan Payments Different companies? If so, debt is only JEDI’s. Two parts of same company? If so, debt is ENRON’s.

11 Enron Basics: Income Enron Enron JEDI 1 Corp
Transfers Asset Cash Different companies? If so, SALE. Two parts of same company? If so, NOTHING.

12 More Complete Enron Picture
Outside (?) investors Equity Payments Enron Corp JEDI Creditors Loan Assets transferred Cash Loan guarantee Still a basic question: ENTITY? Enron

Download ppt "Enron, WorldCom, Global Crossings, Etc."

Similar presentations

McGraw-Hill/Irwin © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. 1-1 McGraw-Hill/Irwin © 2008 The McGraw-Hill Companies, Inc., All Rights.

McGraw-Hill/Irwin © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. 1-1 McGraw-Hill/Irwin © 2008 The McGraw-Hill Companies, Inc., All Rights.
© 2004 The McGraw-Hill Companies McGraw-Hill/Irwin 1-1 1. Name of entity 2. Title of statement 3. Specific date 4. Unit of measure The Balance Sheet reports.

© 2004 The McGraw-Hill Companies McGraw-Hill/Irwin Name of entity 2. Title of statement 3. Specific date 4. Unit of measure The Balance Sheet reports.
Discussion Section #1 Financial Accounting

Discussion Section #1 Financial Accounting
2006 Cash Flow Statement Sources of cash: Beginning cash balance Cash receipts from product sales Other sources of cash Total sources of cash Uses of cash:

2006 Cash Flow Statement Sources of cash: Beginning cash balance Cash receipts from product sales Other sources of cash Total sources of cash Uses of cash:
Financial Documentation Basics: How Do I get Started?

Financial Documentation Basics: How Do I get Started?
Uses of Accounting Information and the Financial Statements

Uses of Accounting Information and the Financial Statements
The Crisis in Financial Reporting Rick Antle Senior Associate Dean and Professor of Accounting Yale School of Management.

The Crisis in Financial Reporting Rick Antle Senior Associate Dean and Professor of Accounting Yale School of Management.
Accounting Is an information system that provides reports to stakeholders about the economic activities and conditions of a business.

Accounting Is an information system that provides reports to stakeholders about the economic activities and conditions of a business.
CHAPTER 1: Accounting in Action

CHAPTER 1: Accounting in Action
Financial Statements. Objectives of Financial Statements To provide information that is: 1.Useful to current and potential investors and creditors in.

Financial Statements. Objectives of Financial Statements To provide information that is: 1.Useful to current and potential investors and creditors in.
3.1PPS t/a Carnegie et al; Accounting: Financial and Organisational Decision Making © 1999 McGraw-Hill Book Co. Aust. ACCOUNTING Financial and Organisational.

3.1PPS t/a Carnegie et al; Accounting: Financial and Organisational Decision Making © 1999 McGraw-Hill Book Co. Aust. ACCOUNTING Financial and Organisational.
CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 18-1 Understanding Cash Flow Analysis.

CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 18-1 Understanding Cash Flow Analysis.
Prepared by: Jan Hájek Accounting 2 Lecture no 1.

Prepared by: Jan Hájek Accounting 2 Lecture no 1.
Balance Sheets Analyzing Assets, Liabilities, & Equity.

Balance Sheets Analyzing Assets, Liabilities, & Equity.
McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2007 All rights reserved. Clinic 2-1 Accounting Clinic II.

McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2007 All rights reserved. Clinic 2-1 Accounting Clinic II.
Strategic Business Planning for Commercial Producers Financial Documentation Basics: How Do I get Started?

Strategic Business Planning for Commercial Producers Financial Documentation Basics: How Do I get Started?
© The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin BASIC FINANCIAL STATEMENTS Chapter 2.

© The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin BASIC FINANCIAL STATEMENTS Chapter 2.
CHAPTER 1 BUSINESS DECISIONS BUSINESS DECISIONS And FINANCIAL ACCOUNTING..

CHAPTER 1 BUSINESS DECISIONS BUSINESS DECISIONS And FINANCIAL ACCOUNTING..
PowerPoint® Slides to accompany Basic Bookkeeping, Seventh Edition Prepared by JD Chazan CPA, CA National Taiwan University 1-1 Copyright © 2015 by Nelson.

PowerPoint® Slides to accompany Basic Bookkeeping, Seventh Edition Prepared by JD Chazan CPA, CA National Taiwan University 1-1 Copyright © 2015 by Nelson.
The Accounting Equation o The resources owned by a business are its assets. o The rights of creditors are the debts of the business and are called liabilities.

The Accounting Equation o The resources owned by a business are its assets. o The rights of creditors are the debts of the business and are called liabilities.

Similar presentations

Ads by Google