Multiple Choice
Vendor analysis has the greatest potential for savings for items which have:
18
views
1. Introduction to Accounting
Types of Accounting
Struggling with Financial Accounting?
Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
A department that incurs costs without generating revenues is a:
A
Cost center
B
Investment center
C
Revenue center
D
Profit center
Verified step by step guidance1
Understand the concept of a cost center: A cost center is a department or unit within an organization that incurs costs but does not directly generate revenue. Its primary focus is on managing expenses efficiently.
Differentiate between the options provided: Investment center, Revenue center, and Profit center. Each of these has distinct characteristics: Investment centers are responsible for generating returns on investments, Revenue centers focus on generating sales or income, and Profit centers are responsible for both revenue generation and cost management to achieve profitability.
Identify the key characteristic of the department described in the problem: It incurs costs without generating revenues, which aligns with the definition of a cost center.
Eliminate the incorrect options based on their definitions: Since the department does not generate revenue or manage investments, it cannot be classified as a Revenue center, Profit center, or Investment center.
Conclude that the correct classification for the department is a Cost center, as it matches the description provided in the problem.
4:10mWatch next
Master Types of Accounting: Financial and Managerial with a bite sized video explanation from Brian
Start learningRelated Videos
Related Practice
Types of Accounting practice set
Problem sets built by lead tutorsExpert video explanations