A segment is a profit center within a business. A segment has the following characteristics:

  • It generates revenues and costs, so an individual functional department is not considered a segment
  • The organization produces financial reports about the profit center
  • The performance of the profit center is regularly reviewed by management

Segments are identified and reported by publicly held companies. In order to avoid an excessive amount of reporting, it is allowable for these companies to aggregate the reporting for smaller segments. There is no requirement for privately held firms to report on their segments.

Related Courses

Public Company Accounting and Finance