Final answer:
An entity must explain how it measures segment assets, as part of its financial reporting. option e.
Step-by-step explanation:
An entity must explain the way it measures segment assets. The T-account is a fundamental concept that helps in understanding how a business operates financially. With the assets on the left side and liabilities on the right, the concept of a T-account illustrates the basic accounting equation where the total assets of a firm are always equal to the sum of its liabilities and net worth (or equity).
Assets include financial instruments such as bank reserves, loans made by the bank, and securities like U.S. Treasury bonds. Liabilities, alternatively, are the obligations the bank owes, such as customer deposits. The net worth or equity represents the total assets minus total liabilities and is included on the liabilities side to achieve balance in the T-account. A positive net worth signifies a healthy business, whereas a negative one indicates bankruptcy.
Understanding the T-account is crucial for grasping the measurement of segment assets, as this concept helps in realizing how assets, liabilities, and equity interact within a firm, influencing its financial health and reporting.