Five of Eight Internally Reported Operating Segments of Rollins Company

question 26

Multiple Choice

Five of eight internally reported operating segments of Rollins Company qualify under the standards set by FASB 131 (ASC 280) for segment reporting.However,the five identified segments do not meet the 75 percent revenue test.FASB 131 (ASC 280) prescribes that management:

• A)subdivide segments until there are at least 10 reportable segments.
• B)consolidate the remaining operating segments and include them under an "all other" category.
• C)select additional operating segments until the 75% threshold is met.
• D)include the heading "corporate headquarters" as an operating segment.

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Definitions:

Current Assets

Assets on a company's balance sheet that are expected to be converted into cash, sold, or consumed within a year or the business's operating cycle, whichever is longer.

Current Liabilities

Short-term financial obligations that are due within one year, indicating the amount a company owes its creditors and others.

Acid Test

A rigorous and conclusive test to prove the effectiveness or value of something, often related to financial solvency.

Debt Ratio

A financial ratio that measures the extent of a company's leverage, represented by the proportion of its total debt to its total assets.