Footnotes About a Company's Segments Are Useful Because the Notes

question 114

Multiple Choice

Footnotes about a company's segments are useful because the notes reveal:

• A)the different types of business activities and the different economic environments.
• B)the company's internal controls over financial reporting.
• C)the company's blueprint for competitive advantage.
• D)the outside auditor's audit report.

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Definitions:

Operating Expenses

The costs associated with running the day-to-day operations of a business, excluding the cost of goods sold.

Average Operating Assets

Average operating assets are calculated by averaging the total value of a company's assets at the beginning and end of an accounting period, used in evaluating asset efficiency.

Minimum Required Rate Of Return

The lowest return on investment that a person or organizational entity, like a company, would accept for a given investment.

Stockholders' Equity

Represents the owners' claim after subtracting total liabilities from total assets; it consists of initial capital investment, retained earnings, and additional paid-in capital.