Segment

DEFINITION of 'Segment'

A component of a business that is or will generate revenues and costs related to operations. Financial information should be available for a segment's activities and performance and must also be periodically reviewed by the company's management before a decision can be made regarding the amount of capital that will be given to the segment for a particular operating period.

BREAKING DOWN 'Segment'

For accounting purposes, FASB's SFAS 131 is the definitive source when it comes to accounting practices involving segments.

An example of a segment would be XYZ Corp.'s widget division because it generates its own revenue as a result of selling widgets and incurs expenses as a result of the costs involved with producing this product.

Keep in mind that not every component of a company constitutes a segment. For example, XYZ Corp.'s marketing division would not be considered a segment because it does not perform operations that directly earn revenue.

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