Which of the Following Statements Is False Concerning the Number

question 18

Multiple Choice

Which of the following statements is false concerning the number of operating segments that should be disclosed?

• A) At least 75 percent of total company sales made to outsiders should be presented.
• B) Even though an operating segment has been reportable in the past and is of continuing significance, it must meet at least one of the three reporting tests to report separately in the current year.
• C) If the 75 percent rule is not met by the results of applying all three reporting tests, additional segments must be disclosed separately despite their failure to satisfy even one of the three quantitative thresholds.
• D) If an operating segment qualifies for disclosure in the current year, prior period segment data presented for comparative purposes must be restated to reflect the newly reportable segment as a separate segment.
• E) The practical limit to the number of operating segments is 10.

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Definitions:

Cost Of Goods Sold

Expenses specifically arising from the production of the merchandise a business sells, such as labor and materials.

Acid-Test Ratio

A liquidity ratio that measures a company's ability to pay off its current liabilities with its quick assets without needing to sell inventory.

Balance Sheet

A financial statement that shows a company's assets, liabilities, and shareholders' equity at a specific point in time, providing a snapshot of the firm's financial condition.

Sales On Account

Sales made to customers for which payment is to be made in the future.