The type of department that generates revenues and incurs costs,and its manager is responsible for the investments made in operating assets is called a:
A)Profit center
B)Cost center
C)Service department
D)Investment center
E)Responsibility center

Question

Quizplus · Accepted Answer

An investment center is responsible for generating revenues, incurring costs, and making investments in operating assets. The manager of the investment center is held accountable for the returns on the investments made in operating assets. Profit centers are responsible for generating revenues and incurring costs, but they do not handle investments in operating assets. Cost centers incur costs but do not generate revenues. Service departments provide support to other departments but do not handle investments or generate revenues. Responsibility centers are a collective term used to describe profit centers, cost centers, and investment centers.

The Type of Department That Generates Revenues and Incurs Costs,and