True / False Questions
1.
Profit centers generate revenues and costs.
2.
If a business activity qualifies as a profit center, it cannot also qualify as an investment center.
3.
An investment center is a profit center where management can make related capital investment choices.
4.
Evaluating the performance of cost centers involves subjective judgments as to the value of the services rendered by these centers.
5.
An accounting system designed to measure the performance of each center within a business is referred to as a profitability accounting system.
6.
One purpose of a responsibility accounting system is to evaluate the performance of center managers.
7.
A responsibility income statement shows the revenue and expenses of each cost center within a particular part of a business.
8.
In responsibility income statements, revenue is first assigned to the centers responsible for creating that revenue.
9.
In assigning costs to centers, each center is charged with costs attributed to the center and based on company-wide rates.
10.
If operations at a center are discontinued, all traceable costs attributed to the cost would be discontinued.