Question

The key to reporting accounting information by segments is determining what constitutes a segment. Of the following, which is not a method of determining a reportable segment?

1) Comparative financial statements
2) Segmental information
3) The 10% test
4) The 75% test

Answer 1

Comparative financial statements are not a method of determining a reportable segment.

Step-by-step explanation:

The key to reporting accounting information by segments is determining what constitutes a segment. A segment is a part of a business or organization that is distinguishable from other parts by its activities, products, services, or geographical location. Determining reportable segments can be done through methods such as segmental information, the 10% test, or the 75% test. Comparative financial statements, on the other hand, are not a method of determining a reportable segment. Comparative financial statements are used to compare financial data for different periods to show changes in financial position and performance over time.