An Operating Segment Is a Component of a Company

question 140

Multiple Choice

An operating segment is a component of a company

• A) that engages in business activities to earn revenues and incur expenses
• B) whose operating results are regularly reviewed by the company's chief operating officer for budgeting and evaluation purposes
• C) for which financial information is available
• D) all of these

---

Definitions:

External Transaction

A financial or non-financial exchange between the business and an external party, impacting the financial statements.

Accounting Equation

The foundational principle of double-entry bookkeeping that states assets equal liabilities plus equity.

Business Activity

Any action that is engaged in for the primary purpose of making a profit, including operations, marketing, and production.

Planning

The process of outlining business objectives, strategies, and actions to achieve those objectives.