Which of the following responsibility centers will use a segmented income statement as an evaluation tool?
A)The cost center
B)The revenue center
C)The profit center
D)The administrative center

Question

Quizplus · Accepted Answer

A profit center is responsible for both generating revenues and incurring costs, and is evaluated based on its profitability. A segmented income statement breaks down the revenues and costs of the profit center into smaller segments, such as products, departments, or geographic regions, to identify areas of strengths and weaknesses in the profitability of the center. Cost centers are evaluated on their ability to control and minimize costs, and therefore do not require a segmented income statement. Revenue centers are evaluated based on their ability to generate revenues and increase sales, but do not incur costs directly, and therefore do not require a segmented income statement. Administrative centers are responsible for providing support services to other departments, and therefore do not directly generate revenues or incur costs, and therefore do not require a segmented income statement.

Which of the Following Responsibility Centers Will Use a Segmented