A company that generates reports by both geographic region and product line must consider additional criteria in identifying operating segments when there are multiple sets of reports. Which of the following statement(s) is correct?An operating segment has a segment manager who is directly accountable to the chief operating decision maker for its financial performance.If more than one set of organizational units exists, each organizational unit is considered an operating segment even if there is only one set for which segment managers are held responsible.If segment managers exist for two or more overlapping sets of organizational units, the nature of the business activities must be considered.
A) I, II, and III.
B) I and III only.
C) I and II only.
D) II and III only.
E) None of the above.

Question

Quizplus · Accepted Answer

Statement I is correct because an operating segment must have a segment manager accountable for its financial performance. Statement III is correct because when there are overlapping sets of organizational units, the nature of business activities should be considered to identify operating segments. Statement II is incorrect because not every organizational unit is considered an operating segment unless segment managers are held responsible for them.

A Company That Generates Reports by Both Geographic Region and Product