Question

Which of the following is true regarding revelations involving Enron and WorldCom?

A. That their upholding of high ethical standards in regard to accounting practices supports the conclusion that the business world should be allowed to regulate itself.

B. That WorldCom, a privately held company, had high ethical standards but that Enron, a publicly traded company, engaged in illegal accounting practices supporting the conclusion that privately held companies should be allowed to regulate themselves whereas publicly held companies need significant government regulation.

C. That WorldCom, a privately held company, engaged in illegal accounting practices but that Enron, a publicly traded company, had high ethical standards supporting the conclusion that privately held companies need significant government regulation whereas publicly held companies should be allowed to regulate themselves.

D. That although illegal accounting practices occurred, it is so difficult to find and regulate such practices that any regulation should be left to the free market.

E. That accounting issues with these companies illustrate that the business world cannot be allowed to regulate itself ethically and that government oversight is needed.

Answer 1

The correct answer is letter E: That accounting issues with these companies illustrate that the business world cannot be allowed to regulate itself ethically and that government oversight is needed.

Explanation:

Enron and WorldCom are just examples of how the business industry is managed, the government has the obligation to be aware of their transactions, and the transparency has to be forced in protection of their clients.