Multiple Choice
Who is primarily responsible for checking the accuracy of accounting reports of businesses?
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1. Introduction to Accounting
Types of Accounting
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Which of the following is NOT one of the three primary types of responsibility centers in accounting?
A
Cost center
B
Profit center
C
Equity center
D
Revenue center
Verified step by step guidance1
Understand the concept of responsibility centers in accounting. Responsibility centers are segments within an organization where managers are responsible for certain activities and their associated financial outcomes.
Learn the three primary types of responsibility centers: Cost center, Profit center, and Revenue center. Each type has distinct characteristics:
- Cost center: Focuses on controlling costs without directly generating revenue.
- Profit center: Responsible for both generating revenue and controlling costs to achieve profitability.
- Revenue center: Focuses solely on generating revenue without direct responsibility for costs.
Analyze the options provided in the question. The options are: Cost center, Profit center, Equity center, and Revenue center.
Identify that 'Equity center' is not a recognized type of responsibility center in accounting. Equity refers to ownership interest in a company and is not categorized as a responsibility center.
Conclude that the correct answer is 'Equity center,' as it does not belong to the three primary types of responsibility centers in accounting.
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