StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...

The Definition of an Operating Segment - Essay Example

Cite this document
Summary
The operating segments of an enterprise are the different profits centers that generate the company money. For instance if a company has various divisions dedicated to the production of different products each division would be considered an independent operating center. …
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER94.5% of users find it useful
The Definition of an Operating Segment
Read Text Preview

Extract of sample "The Definition of an Operating Segment"

Download file to see previous pages

Corporations that sell at the retail level, but who also have an online operation have multiple operating segments. The e-commerce operation would be considered an operating segment. Let’s take the Jiffy Lube business as an example. The money generated by the oil change operation would be considered an operating segment. The car wash operation of the business is another operating segment. Any food items sold inside the store in the waiting area would be a third operating segment of the company. 2. I agree with your definition of an operating segment.

It is imperative for the CEO or COO of a company to evaluate the performance of each operating segment on a recurrent basis. Whenever an operating segment starts to under perform that segment could become unprofitable. A strategy that can be used by management to eliminate operating segments that are not generating profits is divesture. Divesture can be defined as the partial or full disposal of an investment or asset through sale, exchange, closure or bankruptcy (Investopedia, 2011). Investopedia.com (2011).

Divesture. Retrieved September 7, 2011 from http://www.investopedia.com/terms/d/divestiture.asp#axzz1XEq4B6YF Effective and successful managers are able to generate profits from all the operating segments of a company. On many instances companies achieve expansion by adding operating segments to their operations. . Two powerful stock exchanges are the NYSE and the LSE. The Securities and Exchange Act of 1933 requires companies to register with the SEC prior to going public. The Securities and Exchange Act of 1934 discusses the matter of being public.

Once a company is public the SEC oversees its activities. The Securities and Exchange Act of 1934 regulates broker dealers and stock exchanges. 6. GAAP guidelines are used in the preparation of financial statement disclosures. Financial statement disclosures are comments or explanations listed in a company’s financial statements. Three types of items that are covered by disclosures and whose inclusion is mandatory based on GAAP rules are changes or errors, asset retirement and insurance contract modification.

There are also voluntary disclosures included in the business reports of companies. Some voluntary disclosures include forward looking statements and management analysis. 5. The threshold to for an operating segment to be reportable is listed below: Reported revenue is at least 10 percent of combined revenue Reported profit (loss) is at least 10 percent of combined profit (loss) Assets are 10 percent or more of combined assets (Schroeder & Clark & Cathey, 2011). Schroeder, R.G., Clark, M.W., Cathey, J.M. (2011).

Financial Accounting Theory and Analysis (10th ed.). New Jersey: John Wiley & Sons. 7. Weekly Summary Week 5 was very challenging, but I learned a lot about accounting during the week. The individual paper discussed pension funds. I learned that the use of pension funds became used a lot in corporate America after World War II. The accounting profession and the government have ensured that corporations respect the rights of retirees by properly funding pension funds. In

...Download file to see next pages Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“The Definition of an Operating Segment Essay Example | Topics and Well Written Essays - 750 words”, n.d.)
Retrieved de https://studentshare.org/business/1391202-week
(The Definition of an Operating Segment Essay Example | Topics and Well Written Essays - 750 Words)
https://studentshare.org/business/1391202-week.
“The Definition of an Operating Segment Essay Example | Topics and Well Written Essays - 750 Words”, n.d. https://studentshare.org/business/1391202-week.
  • Cited: 0 times

CHECK THESE SAMPLES OF The Definition of an Operating Segment

Segment Reporting for Investor

A segment by definition is a part.... This paper would concentrate on a segment of a company as accepted in regulatory literature.... A segment of a company is widely defined to be a part of the company that is carrying on business activities and which may or may not be earning revenues and/or incurring costs.... hellip; Another condition which qualifies a part of a company as segment is that the chief executive of the company must periodically review the performance of this part in order to provide it a status of a segment....
12 Pages (3000 words) Essay

Utility as a Convergence Standard on Segment Reporting

In the paper "Utility as a Convergence Standard on segment Reporting" it is clear that in the case of the merged MCI Worldcom, the segment-wise reporting under SFAS 131 has not provided the most essential information on the segment wise profitability.... hellip; According to the IFRS Newsletter of Price Waterhouse Cooper introduction, IFRS 8 will result in the simplification of the financial reporting for the companies which are presently reporting different segment information for internal and external purposes....
12 Pages (3000 words) Research Paper

The Proper Accounting Treatment of Auto World Inc

131, Disclosures about Segments of an Enterprise and Related Information, stated that an operating segment is one that has its own business activities where it derives and incurs revenues and expenses, respectively.... One factor to determine whether it is an operating segment is that its operating results are consistently viewed and analyzed by top management for decisions related to resource allocation and to performance assessment.... 41) can also be a reporting unit, that is, “an operating segment or one level below an operating segment” (SFAS No....
8 Pages (2000 words) Essay

Operations Strategy & managent

To create an operating policy refers to the appraising of the existing operational representation of a company and analyzing… A perfect operational policy turns ventures potential policies into practical reality, generating calculated aggressive benefits during the procedure.... Through a wide-scoped definition, this term refers to the policy and manner of a venture's activities in its daily business undertakings (Scott, 2003)....
16 Pages (4000 words) Term Paper

Accounting Standards for Segmental Information

Furthermore, it… This paper also examines if there is evidence on whether the current requirements in segment reporting increases the quality of information that is available to its users.... Through this statement, we can denote that there is a need of carrying out financial reporting through operational segment reporting (Bragg, 2010).... segment reporting involves giving of separate accounts of the individual divisions or units of a company, its subsidiaries and other divisions....
6 Pages (1500 words) Essay

Operating Segments in the International Accounting Standard Board

The relevance and usefulness of the operating segment information have overweighed the expressed concerns on the comparability of the financial report (Behn, 2002). The Since then there have been minor changes that have been made to IFRS 8 by the other IFRSs.... It operates through an entity that ensures reporting as a measure on the operating segment of profits or losses being incurred by an entity.... The IFRS 8 has exceeded the IAS 14 segment reporting in many ways and were presently applicable since the adoption of the… The management has an overall positive influence on the quality of the segment information....
6 Pages (1500 words) Essay

Specifics of Segment Reporting

IFRS 8 is applicable to the financial statements of IFRS 8 states that an operating segment is a component of any organization that engages in business activities that earn revenue.... In business, an operating segment is that an independent unit that produces discriminated revenue thus necessitating preparation of separate books of transactions.... segment reporting is defined as the reporting for the company's separate operating segments as additional disclosures to its financial statements (IFRS 8 website)....
6 Pages (1500 words) Assignment

Operating System - Virtual Memory with Paging

… The paper "operating System - Virtual Memory with Paging" is a delightful example of a literature review on logic and programming.... The paper "operating System - Virtual Memory with Paging" is a delightful example of a literature review on logic and programming.... The author is an experienced programmer and this book elaborates the latest developments and analysis in operating systems technologies incorporates new technologies in computer....
7 Pages (1750 words) Literature review
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us