Question

A cost center

A) only incurs costs and does not directly generate revenues.

B) incurs costs and generates revenues.

C) is a responsibility center of a company which incurs losses.

D) is a responsibility center which generates profits and evaluates the investment cost of earning the profit.

Answer 1

Answer: A---incurs costs and does not directly generate revenue.

Step-by-step explanation:

A cost center is a department or unit in an organization which incurs cost on the organisation for its operation but does not directly add profit or directly generate revenue to the company.

Examples of a cost centre in a company include, The IT department., Research and Development Department.

For example the way in which an IT department, a cost centre in a company can indirectly generate revenue by operating efficiently and for the Research and Development Department is to develop a new promising product.