Similar Operating Segments May Be Combined If the Segments Have

question 40

Multiple Choice

Similar operating segments may be combined if the segments have similar economic characteristics.Which one of the following is a similar economic characteristic under GAAP?

• A)The segments' management teams
• B)The tax reporting law sections
• C)The distribution method for products or services
• D)The expected rates of return and risk for the segments' productive assets

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Definitions:

Common Stock

A type of equity ownership in a corporation, where holders have voting rights and potentially receive dividends.

Stock Dividend

A distribution of extra shares to a company's shareholders, as opposed to monetary compensation.

Retained Earnings

Profits that have been reinvested in the company rather than distributed to stockholders as dividends.

Fiscal Year

A twelve-month period chosen for accounting purposes and financial reporting, which may or may not align with the calendar year.