Under GAAP for Segment Reporting, a Company Must Report

question 25

Multiple Choice

Under GAAP for segment reporting, a company must report

• A) a measure of profit or loss for each reportable segment.
• B) factors used to identify its reportable segments.
• C) the types of products and services from which each reporting segment derives its revenues.
• D) All of these must be reported.

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Definitions:

Direct Materials

Raw materials that can be directly traced to the manufacturing of a product and are a significant portion of the production cost.

Variable Costing

An accounting method that includes only variable production costs in the cost of goods sold and treats fixed costs as period costs.

Contribution Margin

The difference between sales revenue and variable costs, indicating how much revenue contributes to covering fixed costs and generating profit.

Manufacturing Margin

The difference between the cost of goods sold by a manufacturing company and its total sales, reflecting the gross margin specific to manufacturing operations.