Which of the Following Is a Characteristic of a Profit

question 7

Multiple Choice

Which of the following is a characteristic of a profit center?

• A)The center's manager has control over revenues and costs.
• B)The subunit has responsibility for generating revenues, controlling costs, and generating a return on assets.
• C)The subunit can be evaluated using residual income.
• D)The subunit can be evaluated by comparing it to other investment centers.

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Definitions:

Inventory Turnover

A measure of how frequently a company sells and replaces its stock of goods during a certain period of time.

Inventory Balance

The quantity of goods or materials on hand at any given time within a business.

COGS Formulation

The calculation method used to determine the Cost of Goods Sold, indicating the direct costs attributable to the production of the goods sold by a company.

Sustainable Growth Rate

The maximum rate at which a company can grow its earnings without needing to increase its equity or take on new debt.