Question

In each blank next to the following terms, place the identifying letter of its best description.

_______ 1. Cost centerA. Incurs costs without directly yielding revenues_______ 2. Investment centerB. Provides information used to evaluate the performance of a department._______ 3. Departmental accounting systemC. Holds manager responsible for revenues, costs, and investments._______ 4. Operating departmentD. Engages directly in manufacturing or in making sales directly to customers._______ 5. Profit centerE. Does not directly manufacture products but contributes to profitability of the entire company_______ 6. Responsibility accounting systemF. Incurs costs and also generates revenues._______ 7. Service departmentG. Provides information used to evaluate the performance of a department manager.\begin{matrix} \text{\_\_\_\_\_\_\_ 1. Cost center} & \text{A. Incurs costs without directly yielding revenues}\\ \text{\_\_\_\_\_\_\_ 2. Investment center} & \text{B. Provides information used to evaluate the performance of a department.}\\ \text{\_\_\_\_\_\_\_ 3. Departmental accounting system} & \text{C. Holds manager responsible for revenues, costs, and investments.}\\ \text{\_\_\_\_\_\_\_ 4. Operating department} & \text{D. Engages directly in manufacturing or in making sales directly to customers.}\\ \text{\_\_\_\_\_\_\_ 5. Profit center} & \text{E. Does not directly manufacture products but contributes to profitability of the entire company}\\ \text{\_\_\_\_\_\_\_ 6. Responsibility accounting system} & \text{F. Incurs costs and also generates revenues.}\\ \text{\_\_\_\_\_\_\_ 7. Service department} & \text{G. Provides information used to evaluate the performance of a department manager.}\\ \end{matrix}

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1) A. Incurs costs without directly yielding revenues.

Note: One good example of a cost center is the manufacturing department of a manufacturing organization. The department incurs cost but does not yield income directly.

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