segment explanation in SAP

A segment is used to highlight items disclosed in financial reporting by segment. This is opposed to a business area, which forms part of an organizational unit for which a financial statement is drawn for internal purposes. Accounting principles and standards (U.S. GAAP, IFRS, IAS, and so on) mandate that companies produce segmental reporting in certain situations for external purposes. A segment may be a department, product, or geographic location. Segmental reporting is purely for transparency purposes when reporting the profit and risk situations of segments within an enterprise. The underlying reason behind this requirement is to assist users of the financial information to make better judgments about an entity's involvement in different activities. Segment accounting allows a company to report the performance of their segment's activities individually. The importance of segment reporting is that it places more emphasis on segment performance.