A Segment Must Pass All of the Tests in Order

question 89

True/False

A segment must pass all of the tests in order for it to be considered a reportable segment. These tests include the revenue, profit, and asset tests.

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Definitions:

Gross Method

An accounting method where purchases are recorded at their full purchase price without deducting any cash discounts.

Periodic Inventory Method

An accounting practice where inventory levels and cost of goods sold are calculated at predetermined intervals, such as monthly or annually.

Voucher System

A control mechanism in accounting that uses vouchers to record transaction details and authorize cash disbursements.

Voucher System

An internal financial control system for managing disbursements and ensuring all transactions are properly documented and approved before payments are made.