A Loan Against a SaleEnron's case of fraudulent transactions with Merill Lynch's banking company proves to be a perfect example of how loans are used to increase sales when in reality they technically do not they are firm. The “Nigerian barge” transaction followed in 2004 with Enron's sale of electricity generation barges to Merill Lynch. A huge sale as company executives recorded it, but it turned out that it was actually a loan rather than a sale and that Enron did not actually profit from the transaction, Securities and Exchange Commission investigations show in 2004. Perhaps the big question to ask The answer in this essay is: why is the transaction considered a loan rather than a sale? And if it were a loan, what effects would it have on the company balance sheet? First of all, it is important to define what a loan is to differentiate it from a sale. A loan is a transaction between two parties which consists of the delivery of an item to the other party which will be used free of charge and will be returned at a pre-arranged time, as an exact item or in a different form equivalent to the value of the item (Oxford Dictionaries, n.d.). According to the definition a loan exists or a lending relationship exists if both of these elements are present: a monetary debt and a money lending transaction. It is also important to note that a loan always involves a repayment set at some point in the future which may or may not involve the payment of interest (HM Revenue and Customs, n.d., para.4). A sale on the other hand is defined as a transaction in which property is transferred from one person to another in exchange for money or its equivalent paid to the owner of the good or product (The Law Dictionary, n.d.). A sale therefore is t...... half of the paper ......from repurchase should have been listed under Cash flow from investments and financing and not Operating activities respectively. This deliberate effort to label it is a ploy by the company to deceive the public and analysts, giving the impression that the company is doing well, achieving its goals and generating a huge profit from its operations. References: Investopedia (n.d.). Definition of real guarantees. Retrieved April 4, 2014, from http://www.investopedia.comHM Revenue and Customs. Definition of loan. Retrieved April 4, 2014, from http://www.hrmc.gov.ukLibby, R., Libby, P. &Short, D. (2009). Financial Accounting (6th ed.). Boston: McGraw-Hill Irwin.Oxford Dictionaries (n.d.). Definition of the loan. Retrieved April 4, 2014, from http://www.oxforddictionaries.com/usThe Law Dictionary (n.d.). Legal definitions. Retrieved April 4, 2014, from http://thelawdictionary.org