Question

Which of the following is NOT a component or characteristic of operating segments?

a. Operating segments must be aggregated together for reporting purposes.
b. The operating segment(s) have discrete financial information available for it.
c. The operating segment engages in business activities from which it earns revenues and incurs expenses.
d. The segments operating results are regularly reviewed by the company's chief operating decision-maker to assess segment performance and allocate resources to the segment.

Answer 1

Option a, stating that operating segments must be aggregated together for reporting purposes, is NOT a characteristic of operating segments because they are reported separately unless they meet specific aggregation criteria.

Step-by-step explanation:

The question asks which of the following is NOT a component or characteristic of operating segments. The options provided revolve around characteristics of operating segments as they relate to financial reporting and management review within a company. The correct answer is a. Operating segments must be aggregated together for reporting purposes. This statement is not accurate because operating segments are reported separately unless they have similar economic characteristics and meet aggregation criteria. Each operating segment typically has discrete financial information available for it (b), engages in business activities from which it earns revenues and incurs expenses (c), and its results are reviewed by the company’s chief operating decision-maker (d). Therefore, choice a is not a characteristic of operating segments; it is the option among the given choices that incorrectly describes the requirements for reporting operating segments.