Class: ACCT-301 WEEK 6: RESPONSIBILITY ACCOUNTING What is an investment center? What are the managers of...

Class: ACCT-301 WEEK 6: RESPONSIBILITY ACCOUNTING

What is an investment center? What are the managers of an investment center responsible for?

Expert Solution

Investment Center

An Investment center is a business unit inside an entity that has an obligation regarding its own income, costs, and resources, and whose money related outcomes depend on every one of the three elements. It is viewed as any part of a business that can be isolated for detailing purposes as a different working substance. An Investment center normally has its own financial reports, involved at least an income statement and balance sheet. balance sheet.

Managers of an investment center responsible for -

Managers have knowledge regarding whether to expand cash-flow to build benefits or whether to close down an office that is wastefully making utilization of its contributed capital.
The managers of a business unit can improve ROI by artificially drawing down asset usage to levels that are lethal to the long-term prospects of the business.
The managers can compare the ROI to the cost of capital to evaluate a division’s performance
The managers can conclude that the investment center is managing its capital or assets poorly.

ekkarill92 answered 1 year ago

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