Concept explainers
Concept Introduction:
Cost center:
Cost center incurs costs and does not generate the revenue directly
Investment Center:
Investment center takes care of revenue, cost and investment
Departmental Accounting System:
This is an accounting system which records the transactions of a particular department and shows its performance.
Operating Department:
Operating departments conducts the operations of business like manufacturing, Sales etc.
Profit Center:
Profit center generate revenue and incur expenses
Responsibility Accounting System:
This is an accounting system which shows responsibility for managers.
Service Department:
Service departments are assisting departments for operating department. Service departments are not directly engaged in main operations but they perform assisting works.
To Identify:
The terms for given descriptions

Answer to Problem 1QS
The terms for given descriptions are as follows:
Description | Term |
A | 1. Cost Center |
2. Investment Center | |
B | 3. Departmental Accounting System |
4. Operating Department | |
F | 5. Profit Center |
C | 6. Responsibility Accounting System |
E | 7. Service Department |
Explanation of Solution
Term | Explanations | Description |
1. Cost Center | Cost center incurs costs and does not generate the revenue directly | A |
2. Investment Center | Investment center takes care of revenue, cost and investment | C |
3. Departmental Accounting System | This is an accounting system which records the transactions of a particular department and shows its performance. | B |
4. Operating Department | Operating departments conducts the operations of business like manufacturing, Sales etc. | D |
5. Profit Center | Profit center generate revenue and incur expenses | F |
6. Responsibility Accounting System | This is an accounting system which shows responsibility for managers. | G |
7. Service Department | Service departments are assisting departments for operating department. Service departments are not directly engaged in main operations but they perform assisting works. | E |
Want to see more full solutions like this?
Chapter 24 Solutions
FUNDAMENTAL ACCOUNTING PRINCIPLES
- Smith plc commenced two projects on 1 January 2023. The following details relate to them as at 31 December 2023. Cost to date Progress billings invoiced Progress billings received Estimated future costs Estimated final contract price Project 1 Project 2 ₤'000 ₤'000 380 110 290 70 210 55 120 320 650 430 Smith plc uses the percentage completion method based on costs (cost to date/total costs) to account for construction contracts. The policy of Smith plc is that project outcomes can only be reliably measured when a project is at least 35% complete. Required a. Illustrate the five-step method under the IFRS 15 Revenue from Contracts with Customers.arrow_forwardCan you solve this general accounting problem with appropriate steps and explanations?arrow_forwardPlease explain the correct approach for solving this general accounting question.arrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education





