In the late 20th and early 21st centuries, the stock value of Enron Corporation seemed to go up. However, Enron’s earnings were overstated because the company used illegal accounting practices that removed negative cash fl ow items from the income statement.

Investors lost a great deal of money when the problem was discovered.

1. Research Access an Internet search engine and fi nd out how Enron hid its money-losing operations from public view.

2. Think Critically As a result of Enron and a few other large companies’

overstatements of earnings, the federal government passed the Sarbanes-

Oxley Act. Find out the requirements of the Sarbanes-Oxley Act. Do you think this Act will prevent another Enron-like scandal?