A Profit Center

question 155

Multiple Choice

A profit center:

• A) Incurs costs, but does not directly generate revenues.
• B) Incurs costs and directly generates revenues.
• C) Has a manager who is evaluated solely on efficiency in controlling costs.
• D) Incurs only indirect costs and directly generates revenues.
• E) Incurs only indirect costs and generates revenues.

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Definitions:

Accounts Payable

Liabilities of a business that represent its obligations to pay off a short-term debt to its creditors or suppliers.

Accounts Receivable

Money owed to a business by its clients or customers for goods or services delivered or used but not yet paid for.

Normal Balance

The side (debit or credit) of an account that is expected to have a higher balance based on the accounting equation; assets and expenses normally have a debit balance, while liabilities, equity, and revenue normally have a credit balance.

Withdrawals

Money taken out from a bank account, or the act of taking out funds or assets from a business by the owner for personal use.