The difference between a profit center and an investment center is
A)An investment center incurs costs,but does not directly generate revenues.
B)An investment center incurs no costs but does generate revenues.
C)An investment center is responsible for investments made in operating assets.
D)An investment center provides services to profit centers.
E)There is no difference; investment center and profit center are synonymous.

Question

Quizplus · Accepted Answer

A profit center is a division that is responsible for generating both revenues and costs, and its performance is measured based on its profitability. An investment center, on the other hand, is responsible for making investment decisions in operating assets and is evaluated based on its return on investment (ROI). Investment centers can generate revenues, but they also incur costs associated with acquiring and maintaining those assets. Therefore, choice C is the correct answer.

The Difference Between a Profit Center and an Investment Center