What does operating segment mean on the CPA exam?
Operating segment. A component of a public entity that may recognize revenues and incur expenses, whose operating results the chief operating decision maker reviews to allocate resources and assess performance, and for which discrete financial information is available. All three must hold at once.
Defined against ASC 280-10-50-1, 15-3.
Which CPA exam sections use operating segment?
Operating segment appears in the FAR section of the CPA exam.
Related terms
- reporting unit: An operating segment or one level below it, and the level at which goodwill is tested for impairment.
- operating income: Profit from the core business, before interest and tax.
- modified accrual: The basis for governmental fund statements: revenue when measurable and available, expenditure when the liability is incurred.
- analytical procedures: Evaluations of financial information by studying plausible relationships among financial and nonfinancial data.
- transaction price: The consideration an entity expects to be entitled to for transferring goods or services, excluding amounts collected for third parties such as sales tax.
- service organization: A third party whose processing affects a user entity's financial reporting, such as a payroll bureau or a claims processor.