Which of the Following Is a Responsibility Centre Whose Success

question 196

Multiple Choice

Which of the following is a responsibility centre whose success is measured not only by its income, but also by relating that income to its invested capital?

• A) Investment centre
• B) Cost centre
• C) Profit centre
• D) Revenue centre

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Definitions:

Economic Profits

The difference between a firm's total revenues and its total costs, including both explicit and implicit costs.

Accounting Profits

The net income for a company after all expenses have been deducted from revenues, according to generally accepted accounting principles.

Implicit Costs

The opportunity costs of using resources owned by the company for its own operations, rather than earning income elsewhere.

Explicit Costs

Direct payments made to others in the course of running a business, such as wages, rent, and materials.