Which of the Following Is Not True for an Operating

question 28

Multiple Choice

Which of the following is not true for an operating segment according to U.S. GAAP?

• A) Discrete financial information generated by the internal accounting system is available.
• B) The segment earns revenues and incurs expenses.
• C) The segment is regularly reviewed by a chief decision maker to assess performance decisions.
• D) The segment is regularly reviewed by a chief decision maker to make resource allocations.
• E) An organizational unit cannot be an operating segment if all of its operating transactions are only with other segments of the organization.

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Definitions:

Matching Principle

An accounting principle that dictates expenses should be recognized in the same period as the revenues they help to generate.

Market Value

The present rate at which a service or asset is available for purchase or sale in the marketplace.

Capitalized Interest

Interest expenditures included in the cost of a self-constructed asset

Construction Loans

Short-term loans provided to finance the building or renovation of a property, typically converted into a long-term loan after the construction is completed.