Which of the following companies was involved in corporate scandals that contributed to the enactment of the Sarbanes-Oxley Act of 2002?

• A. Apple
• B. Microsoft
• C. Google
• D. Enron

Answer: (D)

Verified step by step guidance

1. Understand the context of the Sarbanes-Oxley Act of 2002: This legislation was enacted in response to major corporate scandals that revealed significant issues in financial reporting and corporate governance.
2. Identify the companies involved in these scandals: Enron, WorldCom, and Tyco International were among the most notable companies whose fraudulent activities led to the creation of the Sarbanes-Oxley Act.
3. Recognize the role of Enron: Enron's scandal involved massive accounting fraud, including the use of special purpose entities (SPEs) to hide debt and inflate profits, which ultimately led to its bankruptcy.
4. Differentiate the companies listed in the question: Apple, Microsoft, and Google were not involved in the corporate scandals that led to the Sarbanes-Oxley Act. Enron is the correct answer as it played a central role in these events.
5. Conclude with the importance of the Sarbanes-Oxley Act: This act introduced stricter regulations for financial reporting, internal controls, and corporate accountability to prevent similar scandals in the future.