WorldCom classified $3.85 billion in operating expenses as long-term investments. How would this make WorldCom's financial statements more attractive to investors?
A) by decreasing depreciation
B) by reducing capital expenditures
C) by raising its reported earnings
D) by boosting its cash flows

Question

Quizplus · Accepted Answer

By classifying operating expenses as long-term investments, WorldCom would be able to increase its reported earnings. This would make the financial statements more attractive to investors, as higher earnings typically indicate a stronger and more profitable company. However, this practice is unethical and misleading, as it does not accurately reflect the true financial position of the company.

WorldCom Classified $3