Operating Segment Quiz

Instruction. Select the best answer among the choices given.

1. Which statement is incorrect regarding reporting of segment information in

accordance with PFRS 8?
A. PFRS 8 requires that an entity should disclose information to enable users of its
financial statements to evaluate the nature and financial effects of the types of
business activities in which it engages and the economic environments in which it
operates.
B. PFRS 8 applies to the financial statements of an entity whose debt or equity
instruments are traded in a public market.
C. If an entity that is not required to apply PFRS 8 chooses to disclose information
about segments that does not comply with PFRS 8, it shall not describe the
information as segment information.
D. None, all the statements are correct.

2. The method used to determine what information to report for operating segments is
referred to as the
A. Segment approach
B. Operating approach
C. Enterprise approach
D. Management approach

3. An operating segment is a component of an entity:

A. That engages in business activities from which it may earn revenues and incur
expenses (including revenues and expenses relating to transactions with other
components of the same entity).
B. Whose operating results are reviewed regularly by the entity's chief operating
decision maker to make decisions about resources to be allocated to the
segment and assess its performance.
C. For which discrete financial information is available.
D. All of the above.

4. An entity shall report separately information about an operating segment that meets
which of the following quantitative thresholds?
A. Its reported revenue, including both sales to external customers and
intersegment sales or transfers, is 10 per cent or more of the combined revenue,
internal and external, of all operating segments.
B. The absolute amount of its reported profit or loss is 10 per cent or more of the
greater, in absolute amount, of (i) the combined reported profit of all operating
segments that did not report a loss and (ii) the combined reported loss of all
operating segments that reported a loss.
C. Its assets are 10 per cent or more of the combined assets of all operating
segments.
D. Any of these.
5. An entity shall report separately information about an operating segment that meets
which of the following quantitative thresholds?
A. Its reported revenue, including both sales to external customers and
intersegment sales or transfers, is 10 per cent or more of the combined revenue,
internal and external, of all operating segments
B. Its reported revenue, including both sales to external customers and
intersegment sales or transfers, is 10 per cent or more of the combined revenue,
internal and external, of all operating segments.
C. Its assets are 10 per cent or more of the combined assets of all operating
segments.
D. Any of these.

6. PFRS 8 defines
A. Segment revenue
B. Segment expense
C. Segment result
D. None of these

7. What should the entity do if the total external revenue reported by operating
segments constitutes less than 75 per cent of the entity's revenue?
A. Additional operating segments must be identified as reportable segments.
B. Additional operating segments must be identified as reportable segments even if
they do not meet the quantitative thresholds.
C. Additional operating segments must be identified as reportable segments until at
least 75 per cent of the entity's revenue is included in reportable segments.
D. All of the above.

8. In accordance with PFRS 8, an entity shall disclose

A. Factors used to identify the entity’s reportable segments.
B. The judgments made by management in applying the aggregation criteria.
C. Types of products and services from which each reportable segment derives its
revenues.
D. All of these.

9. In accordance with PFRS 8, entity-wide disclosures do not include

A. Information about products and services
B. Information about geographical areas
C. Information about major customers
D. Information about profit or loss, assets and liabilities

10. An entity should disclose information to enable users of its financial statements to
evaluate the nature and financial effects of the types of business activities in which it
engages and the economic environments in which it operates. To give effect to this
principle, an entity shall disclose
A. General information
B. Information about profit or loss, assets and liabilities
 C. Reconciliations
D. All of these

11. Company ABC is a listed diversified retail company. It has three main types of
stores: general department stores, liquor stores and specialist toy stores. Each of
these stores has different products, customer types and distribution processes.
Company A has identified three business segments: A, B and C stores. All three
business units earn most of their revenue from external customers. Total
consolidated revenue of Company ABC is P600 million.
A. Stores B Stores C All Segments
Stores
Revenue P400M P100M P50M P550M
Segment 15M 7M 4M 26M
profit
Assets 900M 200M 100M 1,200M
In its segment information, how many reportable segments does the company have?
A. 3
B. 2
C. 1
D. 0

12. ABC Corporation and its divisions are engaged solely in manufacturing. The
following data pertain to the industries in which operations were conducted for the
current year:
Divisio Operating Profit (Loss)
n
A P30,000,000
B 10,000,000
C (8,000,000)
D (2,000,000)
E 5,000,000
In its current year financial statements, ABC Corporation should disclose an
operating segment if operating profit or loss is at least
A. P1,000,000
B. P3,500,000
C. P4,500,000
D. P5,500,000

13. ABC Corporation's revenue for the current year were as follows:
Consolidated revenue per income statement P1,200,000
Intersegment sales 180,000
Intersegment transfers 60,000
Combined revenues of all operating segments P1,440,000
ABC has a reportable segment if that operating segment's revenues is at least
A. P144,000
 B. P120,000
C. P24,000
D. P 6,000

14. The following information pertains to ABC Corporation and its divisions for the
current year. Sales to unaffiliated customers - P2,000,000; Intersegment sales
similar to those sold to unaffiliated customers - P600,000; Interest earned on loans
to other operating segments - P40,000. ABC and all of its divisions are engaged
solely in manufacturing operations. ABC has a reportable segment if that segment's
revenue is at least
A. P264,000
B. P260,000
C. P204,000
D. P200,000

ABC Corporation a publicly owned corporation, is subject to the requirements for

segment reporting. In its income statement for the current year, ABC reported revenues
of P50,000,000, operating expenses of P47,000,000, and net income of P3,000,000,
Operating expenses include payroll costs of P15,000.000. ABC's combined identifiable
assets of all industry segments at the end of the current year were P40,000,000.
Reported revenues include P30,000,000 of sales to external customers.

15. In its current year financial statements, ABC should disclose major customer data if
sales to any single customer amount to at least
A. P 300,000
B. P4,000,000
C. P3,000,000
D. P5,000,000

16. External revenue reported by operating segments must be at least

A. P22,500,000
B. P12,500,000
C. P15,000,000
D. P37,500,000

17. The equity of The ABC Company is traded on a recognized stock exchange. ABC
regularly reports the financial results of five different business units to its chief
operating decision maker. The relevant revenues for the current year for these five
operations, as a percentage of total external and internal revenue, were as follows:
Business % Internal % External % Total
Operation
1 3 35 38
2 10 14 24
3 15 5 20
4 0 9 9
5 0 9 9
 The reportable segments of ABC are
A. 1 and 2 only
B. 1,2,3 and 4 only
C. 1,2 and 3 only
D. 1,2,3,4 and 5

18. The following segments have been identified for a business, along with their sales.
No segment qualifies on any other criterion for determining reportable segments
except possibly for revenue. Sales for each segment, and the total for the company
follow:
Segment Sales
1 P 500,000
2 200,000
3 100,000
4 800,000
5 150,000
6 200,000
7 175,000
total company P2,125,000
sales
What is the minimum number of reportable segments for this company?
A. 5
B. 3
C. 4
D. 2

19. ABC Corporation discloses operating-segment information. The following information

is available for the current year:
Operating Sales Traceable Operating Expenses
Segment
A P1,000,000 P 600,000
B 800,000 500,000
C 600,000 350,000
Additional current year expenses, not included above, are as follows: Indirect
operating expenses - P360,000. And General corporate expenses - P240,000. In the
measure of segment profit or loss reviewed by the chief operating decision maker,
appropriate common operating expenses are allocated to segments based on the
ratio of a segment’s sales to total sales, but general corporate expenses are not.
Segment C’s current year profit for external reporting purposes was
A. P100,000
B. P160,000
C. P130,000
D. P250,000

20. ABC Company has three manufacturing divisions, each of which has been
determined to be a reportable segment. Common costs are appropriately allocated
on the basis of each division’s sales in relation to ABC’s aggregate sales. In the
current year, Division I had sales of P6,000,000, which was 20% of ABC’s total
sales, and had traceable operating costs of P3,800,000. ABC incurred operating
costs of P1,000,000 that were not directly traceable to any of the divisions. In
addition, ABC incurred interest expense of P600,000. In reporting segment
information, what amount should be shown as operating profit of Division I for the
current year?
A. P2,000,000
B. P1,880,000
C. P1,400,000
D. P2,200,000