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Give the definition of the following: Investment Center.

Question:

Give the definition of the following: Investment Center.

Responsibility Accounting:

In accounting, responsibility accounting refers to the control system used by the management to achieve different accounting objectives. The responsibility center can be broken into cost, profit, revenue, and investment centers.

Answer and Explanation: 1

Investment center refers to the revenue-generating units of the company. These units also control costs incurred by the cost centers to minimize the risk of having negative income in a particular year. A manager holding position in one of those investment centers usually carries over the tasks of establishing a good credit policy and any other policies that can be applicable to the business entity.


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Responsibility Accounting: Benefits & Limitations

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Chapter 12 / Lesson 5
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Responsibility accounting is used to calculate expenses and revenue based on their channels of management or through who is responsible for them. Learn the several benefits, as well as limitations, to responsibility accounting.


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