BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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It has to be used simultaneously with segments to create separate balance sheet and P&L statements.
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It is the only object that can be uniformly derived using segments.
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It is an element for which separate balance sheet and P&L statements can be created
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It is the only object from which segments can be uniformly derived.
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Detailed explanation-1: -Thus, a profit center is is a division that is expected to add or generate revenue for the entity.
Detailed explanation-2: -Solution: A profit centre is a centre where the manager has the responsibility of generating and maximising profits. In a profit centre, the manager has the responsibility and the authority to make decisions that affect both costs and revenues (and thus profits) for the department or division.
Detailed explanation-3: -Definition. A profit center is an organizational unit in accounting that reflects a management-oriented structure of the organization for the purpose of internal control. You can analyze operating results for profit centers using either the cost-of-sales or the period accounting approach.
Detailed explanation-4: -An example of a profit center is the selling or sales department. This business segment uses company resources like rent, sales staff salaries, and utilities to generate revenues by selling products to customers. Management typically analyzes the performance of both the department as a whole and its manager.