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 Managerial Accounting: The Cornerstone of Busines... ISBN:9781337115773 Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger Publisher:Cengage Learning Survey of Accounting (Accounting I) ISBN:9781305961883 Author:Carl Warren Publisher:Cengage Learning Principles of Accounting Volume 2 ISBN:9781947172609 Author:OpenStax Publisher:OpenStax College College Accounting, Chapters 1-27 ISBN:9781337794756 Author:HEINTZ, James A. Publisher:Cengage Learning, Financial And Managerial Accounting ISBN:9781337902663 Author:WARREN, Carl S. Publisher:Cengage Learning, Managerial Accounting ISBN:9781337912020 Author:Carl Warren, Ph.d. Cma William B. Tayler Publisher:South-Western College Pub Managerial Accounting: The Cornerstone of Busines... ISBN:9781337115773 Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger Publisher:Cengage Learning Survey of Accounting (Accounting I) ISBN:9781305961883 Author:Carl Warren Publisher:Cengage Learning Principles of Accounting Volume 2 ISBN:9781947172609 Author:OpenStax Publisher:OpenStax College College Accounting, Chapters 1-27 ISBN:9781337794756 Author:HEINTZ, James A. Publisher:Cengage Learning,
Financial And Managerial Accounting ISBN:9781337902663 Author:WARREN, Carl S. Publisher:Cengage Learning, Managerial Accounting ISBN:9781337912020 Author:Carl Warren, Ph.d. Cma William B. Tayler Publisher:South-Western College Pub What is a Responsibility Center?A responsibility center is a functional entity within a business that has its own goals and objectives, dedicated staff, policies and procedures, and financial reports. It is used to give managers specific responsibility for revenues generated, expenses incurred, and/or funds invested. This allows the senior managers of a company to trace all financial activities and results of a business back to specific employees. Doing so preserves accountability, and may also be used to calculate bonus payments for employees. There may be many responsibility centers in a business, but never less than one such center. Thus, a responsibility center is usually a subset of a business. These centers are usually stated on a firm’s organization chart. From an accounting perspective, a financial report should be issued to each responsibility center that itemizes the revenues, expenses, profits, and/or return on investment for which the manager of each center is solely responsible. This can result in quite a large number of customized reports being issued on an ongoing basis. The use of multiple responsibility centers requires a certain amount of corporate infrastructure to develop each center, track its results, and manage expectations with the various managers. Types of Responsibility CentersA responsibility center may be one of four types, which are noted below. Revenue CenterA revenue center is solely responsible for generating sales. A typical revenue center is the sales department. Cost CenterA cost center is solely responsible for the incurrence of certain costs. A typical cost center is the janitorial department. Profit CenterA profit center is responsible for both revenues and expenses, which result in profits and losses. A typical profit center is a product line, for which a product manager is responsible. Investment CenterAn investment center is responsible not only for profits, but also for the return on funds invested in the group's operations. A typical investment center is a subsidiary entity, for which the subsidiary's president is responsible. What is the department that incurs costs without directly generating revenues?Cost Centers - Incurs costs without directly generating revenue.
Which Centre is a responsibility Centre that increases cost but does not directly generate revenue?Answer and Explanation: 1. A cost center is a unit of a business that incurs costs but does not directly generate revenues.
What are the 4 types of responsibility centers?A responsibility center may be one of four types, which are noted below.. Revenue Center. A revenue center is solely responsible for generating sales. ... . Cost Center. A cost center is solely responsible for the incurrence of certain costs. ... . Profit Center. ... . Investment Center.. Which responsibility center generates revenue and cost?Profit Centre is accountable for all the actions associated with the sales of goods and production. Investment Centre- This center is responsible for both investments and revenue. The investment manager can control expenses, income, the fund invested in assets, etc.
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Which center is a responsibility center that incurs costs but does not directly generate revenue?
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