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Types of financial responsibility centers
Financial responsibility center can be defined as the responsibility centers in which the assigned responsibility are described in the term of finance. Thus there are four types of financial responsibility centers which include investment centers, profit centers, cost centers and revenue centers.
Investment centers
This responsibility center can be defined as the center in which mangers are held responsible for both the income statement and some balance sheet items (Adam Hayes 2019). The main advantage of investment center is that it will help the consumers and entities in understanding the benefits of investing as they are involved in sharing and educating the customers related to investments. Another merit is that it leads the entity to seek profits from the investment and lending activities in addition to the core production activity of the entity. The main demerit is that it focuses on only one area and it can restrict the growth of the business.
Revenue centers
In this center the management is held accountable for the generation of the revenue and it is the...