In the situation where an entity has invested in segments that are diverse:
A) Segment information should enable the users of the financial statements to better predict the future profitability of the entity.
B) Segment information should enable the users of the financial statements to better predict the risk exposure of the entity.
C) Segment information is less useful because according to portfolio theory investments that are not correlated reduce the risk of an entity.
D) Segment information should enable the users of the financial statements to better predict the future profitability of the entity and segment information should enable the users of the financial statements to better predict the risk exposure of the entity.
E) None of the given answers.

Question

Quizplus · Accepted Answer

Segment information is important in this situation as it helps users to understand the profitability and risks associated with each segment. With diverse investments, segment information can provide more accurate and relevant information to users for making informed decisions about the entity's future prospects.

In the Situation Where an Entity Has Invested in Segments