Which of the Following Statements Is True Regarding the Determination

question 56

Multiple Choice

Which of the following statements is true regarding the determination of operating segments under SFAS 131?

• A)An operating segment is a component of an enterprise that engages in business activities from which it only earns revenues.
• B)The operating results of an operating segment are reviewed regularly by the corporate controller to assess performance.
• C)There is integral financial information available for each operating segment
• D)An organizational unit can be an operating segment if all of its revenues or expenses result from transactions with other segments.
• E)All parts of a company must be included in some operating segment.

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Definitions:

Net Present Value

The difference between the present value of cash inflows and the present value of cash outflows over a period, used in capital budgeting to assess the profitability of investments.

Compound Interest

Interest calculated on the initial principal, which also includes all of the accumulated interest of previous periods of a deposit or loan.

Cash Inflow

Money that is moving into a business from various sources over a period, such as sales, financing, or investment income.

Present Value

The current value of a future sum of money or stream of cash flows, given a specified rate of return.