Lehman Brothers (now bankrupt) was able to use an accounting strategy known as Repo 105 to spin debt off its books so that it appeared to be less leveraged than it was. Which of the following is correct?
A) Lehman's accounting strategy was similar to that of Enron.
B) Lehman's accounting strategy was similar to that of WorldCom.
C) Lehman's accounting strategy was similar to that of Bausch & Lomb.
D) Lehman's accounting strategy was similar to that of Tyco.

Question

Quizplus · Accepted Answer

Lehman Brothers' use of Repo 105 to temporarily remove debt from its balance sheet before reporting its financial status is similar to the accounting strategies employed by Enron. Both companies used complex accounting maneuvers to hide their true financial health from investors and regulators.

Lehman Brothers (Now Bankrupt) Was Able to Use an Accounting