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? (I.) An operating segment has a segment manager who is directly accountable to the chief operating decision maker for its financial performance.
(II.) 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.
(III.) 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 true, as an operating segment should have a segment manager who reports to the chief operating decision maker. Statement (II) is not entirely accurate, as not all organizational units need to be considered operating segments. Finally, statement (III) is true, as the nature of the business activities of multiple sets of organizational units must be assessed to identify the appropriate operating segments. Therefore, the correct answer is (B) I and III only.

A Company That Generates Reports by Both Geographic Region and Product