In Deciding on the Size of a Line of Credit

question 29

Multiple Choice

In deciding on the size of a line of credit, which of the following is an important tool?

• A) cash budget
• B) income statement
• C) balance sheet
• D) statement of owner's equity

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Definitions:

Responsibility Centers

These are parts or segments of a business for which individual managers are responsible, usually in terms of costs, revenues, or investment.

Cost Center

A business unit or department within an organization that does not directly generate revenue but incurs costs, used for budgeting and cost control.

Profit Center

A segment or division within a company that is responsible for generating its own revenues and profits, and is evaluated based on its profitability.

Investment Center

A business unit or segment whose manager has control over cost, revenue, and investments in assets, and is evaluated on profitability and return on investment.