Responsibility Accounting MCQs

True Tamplin

Written by True Tamplin, BSc, CEPF®
Updated on March 25, 2022

This quiz consists of multiple choice questions (MCQs) on responsibility accounting. Students can use the test to assess their conceptual learning about the topic.

If you find it challenging to answer these questions, we advise that you thoroughly read our chapter on responsibility accounting. To begin the quiz, simply complete the questions below.

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Frequently Asked Questions

What is a Profit Centre?

A Profit Centre is a division of an organization responsible for its profits and losses. It can be a business unit, geographical area, or product line. A Profit Centre is typically managed separately from other divisions of the organization to assess its performance and make decisions about its future.

How is a Profit Centre different from a cost centre?

The primary purpose of a Profit Centre is to increase the organization’s overall profitability. By breaking down the business into separate profit-generating units, it is possible to identify and address underperforming areas, make better decisions about allocating resources and measure individual performance against specific goals.

How is a Profit Centre different from a cost centre?

How is a Profit Centre different from a cost centre?

How should an organization go about setting up Profit Centres?

The process of setting up Profit Centres should be tailored to the organization’s specific needs. Typically, it will involve dividing the business into different areas based on geography, product line, or business function. Each Profit Centre should then be given its budget and tasked with achieving specific goals. Finally, staff within each Profit Centre should be held accountable for their results, and performance measures should be put in place to track progress.

What are the difficulties of running a profit center?

Decentralized decision making may provoke questioning of decisions taken at the business level if headquarters are more capable of generating profits.

True Tamplin, BSc, CEPF®

About the Author
True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.

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