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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Differentiate between a profit center and an investment center.

To determine

Responsibility center: A department or unit of a corporation where the management assigns the responsibility of evaluation, control, and management of the resources of the unit to the manager, is referred to as responsibility center.

Types of responsibility enters:

  • Cost center
  • Profit center
  • Investment center

To differentiate: Profit center from investment center

Explanation

Differences between profit center and investment center:

Profit Center Investment Center
The manager of profit center is assigned the responsibility of costs and revenues of the unit or department. The manager of investment center is assigned the responsibility of costs, revenues, and resources invested in assets...

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