Macabalang, Shaliqah Rizzah B.

1. What are the quantitative thresholds in identifying reportable segments?

a. The segment revenue, including both sales to external customers and intersegment sales or transfers, is
10% or more of the combined revenue, internal and external, of all operating segments.
b. The absolute amount of profit or loss of the segment is 10% or more of the greater in absolute amount of:
1. Combined profit of all operating segments that reported a profit.
2. Combined loss of all operating that reported a loss.
c. The assets of the segment are 10% or more of the combined assets of all operating segments.

2. Explain the 75% threshold in identifying reportable segments?

It is when the total external revenue of reportable operating segments constitutes less than 75% of the entity
external revenue, an additional operating segments shall be identified as reportable segments even if they do
not meet the 10% quantitative threshold until at least 75% of the entity external revenue is included in
reportable segments.

3. What is a major customer?

A major customer is defined as a single external customer providing revenue which amounts to 10% or more
of an entity’s external revenue.

4. Enumerate the information to be disclosed for each reportable segment, general information and entity
wide (disclosures).
a. Reportable segment disclosure
1. General information about the operating segment
2. Information about profit or loss, including specified revenue and expenses included in the measure of
profit or loss
3. Information about segment assets and segments liabilities and the basis of measurement
4. Reconciliations of the totals of segment revenue, segment profit or loss, segment assets, segment
liabilities and other material segment items to corresponding items in the entity’s financial
statements.
b. Disclosures about general information
1. Factors used to identify the reportable segments
2. Type of products and services from which each reportable segment derives revenue.
c. Entity-wide disclosures
1. Information about products and services
2. Information about geographical areas
3. Information about major customers
4.

5. Differential cash basis and accrual basis of accounting.

Cash basis is income recognized when received regardless of when earned, and expense is recognized when
paid regardless of when incurred.
While in accrual basis, income is recognized when earned regardless of when received and expense is
recognized when incurred regardless of when paid.

6. What are the formulas in computing sales and purchases under cash basis?
Sales = Cash sales + collection of trade receivables
Purchases = Cash purchases + payments to trade creditors

7. What are the formulas in computing sales and purchases under accrual basis?
Sales = cash sales + sales on account
Purchases = cash purchases + purchases on account
8. What are the formulas in computing income and expenses under accrual basis?
Income = items earned are considered as income regardless of when received
Expense = items incurred are treated as expense regardless of when paid
9. Differentiate double entry and single entry system.
Double entry system is the system where all transactions are normally analysed and recorded in terms of
debits and credits while single entry system is the system of record keeping in which transactions are not
analysed and recorded in the double entry framework.

10. What are the single entry formulas in computing net income for a proprietorship or partnership and
corporation respectively?

For proprietorship or partnership

Capital, end of the year xx

Add: withdrawals xx
Total xx
Less: capital, beginning of year xx
Additional investments xx xx
Net income (loss) xx

For corporation

Retained earnings, end xx

Add: Dividends declared or paid xx
Other items that decrease retained earnings but
Not profit or loss xx
Total xx
Less: retained earnings, beginning xx
Other items that increase retained earnings but
Not profit or loss xx
Net income (loss) xx