Asked by juan david jimenez vargas on Apr 29, 2024

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In deciding on the future status of an unprofitable segment management should recognize that net income could decrease by eliminating the unprofitable segment.

Unprofitable Segment

A division or branch of a company that does not generate profit and may cause a financial drain on the business.

  • Comprehend the effects of discontinuing a non-profitable product line on the overall net earnings.
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Kayla SuttonMay 03, 2024
Final Answer :
True
Explanation :
Eliminating an unprofitable segment may result in the loss of its contribution margin, which could lead to a decrease in net income. However, it may be necessary to eliminate the segment in order to improve overall profitability in the long term.