Question

"Financial statement users are interested in segment financial reports because they:

1. Are more timely than annual reports.
2. Provide financial data on a disaggregated basis.
3. Enable to users understand financial performance of a company's operating segments.
a. I, II, and III.
b. I and III only
c. II and III only
d. I and II only"

Answer 1

Users of financial statements are interested in segment reports because these reports provide a disaggregated view of financial data and enable understanding of the performance of individual operating segments. The correct answer to the question is option c, which states II and III only.

Step-by-step explanation:

Financial statement users are interested in segment financial reports because they:

1. Provide financial data on a disaggregated basis.
2. Enable users to understand the financial performance of a company's operating segments.

Segment financial reports are essential because they allow users to see beyond the aggregated data presented in annual reports, diving into the specific performance of different areas of the company.

This detailed view is crucial for outside investors, like bondholders and shareholders, who may not have a personal relationship with the company managers but are willing to provide financial capital based on the available information regarding the company's products, revenues, costs, and profits.

The correct answer to the question is c. II and III only.