In the Situation Where an Entity Has Invested in Segments

question 75

Multiple Choice

In the situation where an entity has invested in segments that are diverse:

• A) Segment information should enable the users of the financial statements to better predict the future profitability of the entity.
• B) Segment information should enable the users of the financial statements to better predict the risk exposure of the entity.
• C) Segment information is less useful because according to portfolio theory investments that are not correlated reduce the risk of an entity.
• D) Segment information should enable the users of the financial statements to better predict the future profitability of the entity and enable the users of the financial statements to better predict the risk exposure of the entity.

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Definitions:

Economic Welfare

The overall well-being of individuals and communities in terms of wealth, health, and happiness, often assessed by indicators like GDP and quality of life measures.

Federal Reserve Bank

The central banking system of the United States, responsible for setting monetary policy, issuing currency, and regulating financial institutions.

Money Supply

The sum total of all monetary assets within an economy, accounting for cash, coins, and checking and savings accounts' balances, at a specific instant.

United States Treasury

A government department responsible for managing federal finances, issuing currency, collecting taxes, and paying bills on behalf of the United States government.