Which of the following situations does NOT demonstrate an attempt at financial engineering?
A) creating complex legal arrangements and financial instruments
B) structuring debt financing so that it meets the GAAP definition of equity rather than debt
C) accounting for bona fide business transactions in a transparent manner
D) aggressively interpreting GAAP so that the impact on critical ratios is minimized

Question

Quizplus · Accepted Answer

Accounting for bona fide business transactions in a transparent manner is not an attempt at financial engineering. Financial engineering involves creating complex financial structures or manipulating accounting rules to achieve a specific financial outcome. Simply transparently accounting for legitimate business transactions is not an attempt at financial engineering. Choices A, B, and D all involve some form of financial engineering.

Which of the Following Situations Does NOT Demonstrate an Attempt