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Responsibility Center DefinitionIn accounting, a
responsibility center refers to an organizational subunit in a corporation. For instance, a large corporation may consist of numerous smaller business groups or divisions, some or all of these organizational subunits
could be set up as responsibility centers.
Responsibility AccountingResponsibility accounting is a system of organizational architecture designed to promote goal congruence among managers and employees in a company or organization. It is also intended to appropriately measure and evaluate the performance of people and organizational subunits within the corporation. Many also employ responsibility accounting systems to ensure both responsibility and accountability among the hierarchy of the ranks within the organization. Types of Responsibility CentersThe following include the types of responsibility centers: If you want to learn how you can be the best wingman, then access our free How to be a Wingman guide! [box]Strategic CFO Lab Member Extra Access your Projections Execution Plan in SCFO Lab. The step-by-step plan to get ahead of your cash flow. Click here to access your Execution Plan. Not a Lab Member? Click here to learn more about SCFO Labs[/box] Sources: See Also:
June 9,
2022 Hiring the right accountant When I meet a business owner operating at a successful $10 million in revenue, they often mention, “My CPA”… I immediately know that CEO/Entrepreneur is referring to their Tax CPA. That is because one thing that all Entrepreneurs have in common is that they must file a tax return. So, from Read More »
September 24, 2021 See also:Quick Ratio AnalysisPrice to Book Value AnalysisPrice Earnings Growth Ratio AnalysisTime Interest Earned Ratio Analysis Use of Financial Ratios Financial Ratios are used to measure financial performance against standards. Analysts compare financial ratios to industry averages (benchmarking), industry standards or rules of thumbs and against internal trends (trends analysis). The most useful comparison when Read More » CPA’s are SpecializedJune 8, 2021 The Difference in CPAs Looking back at my career I don’t know how many times I have introduced myself to someone and they ask, “Are you a CPA?” and I say yes. Then they tell me “you must be very busy with tax season” and I look at them with a bit of awe and Read More »
JOIN OUR NEXT SERIES Financial Leadership Workshop THE ART OF THE CFO® Financial Leadership Workshop Is a responsibility center in which the manager is held responsible for the use of assets as well as for profit?A responsibility center in which the manager is held accountable for the profitable use of assets and capital is commonly known as a(n): - Cost center. - Revenue center.
In which type of responsibility center is the manager held accountable for its profits?A revenue center is an organizational segment in which a manager is held accountable only for revenues.
What is a profit responsibility center?A profit center is an organizational segment that is responsible for costs and revenues (and therefore, profit), but not investments in assets. Managers of profit centers are responsible for revenues, costs, and resulting profits.
What are the three types of responsibility centers?Types of Responsibility Centers. A revenue center is solely responsible for generating sales. ... . A cost center is solely responsible for the incurrence of certain costs. ... . A profit center is responsible for both revenues and expenses, which result in profits and losses.. |