Intersegment Sales

You work in the boot division of a major footwear manufacturer. You need shoelaces for all the boots you make. The conglomerate you work for also owns a shoelace manufacturer, so that's where you go to purchase the supply you need.

By making these transactions, you're engaged in intersegment sales. The term applies to product sales that take place between two parts of the same company.

It may seem like a pointless enterprise (like moving money from your left pocket to your right pocket), but the transactions are necessary for accounting purposes. The parent company needs to keep track of where all the money goes. As such, those shoelaces you bought need to be accounted for. Even though the money all stays within the same larger company, the transfer of funds in exchange for the product helps keep the records clear and allows the parent firm to see how individual divisions are performing.