1. Understanding the functions of each responsibility center.
Accounting 101
Understanding the functions of each responsibility center.
This training sessions purpose is to help you better understand a responsibility centers purpose and the role each one of you play in its operation.

2. Expenses
Expenses are simply money the business uses to create revenue. Businesses acquire all types of expenses depending on what it takes to keep the business operating.

3. Revenue
Revenue in a business is profit minus loss. Revenue is important in a company because it is what keeps it up and running. According to Investopedia, “The amount of money that a company actually receives during a specific period, including discounts and deductions for returned merchandise. It is the "top line" or "gross income" figure from which costs are subtracted to determine net income “ (Investopedia)

4. Return on Investments
Return on Investments also know as ROI is a part in a business that often times creates more revenue for the business. ROI, or Return on Investment, is a very popular metric because of its versatility and simplicity. That is, if an investment does not have a positive ROI, or if there are other opportunities with a higher ROI, then the investment should be not be undertaken.

5. Purpose
Responsibility accounting involves accumulating and reporting costs on the basis of the manager who has the authority to make the day-to-day decisions about the items. Each individual held accountable for the responsibility accounting numbers is categorizes as a responsibility center. There are three areas associated with responsibility center and each area focuses on a combination of different tasks. The three areas are Cost, Profit and Investment Centers. The overall purpose of this system is to keep information accurate and reliable.

6. The Cost Center
A cost center incurs costs but does not directly generate revenues. Managers of cost centers have the authority to incur costs. They are evaluated on their ability to control costs. Cost centers are usually either production departments or service departments. The former participate directly in making the product. The latter provide only support services.

7. The Profit Center
A profit center incurs costs and also generates revenues. Managers of profit centers are judged on the profitability of their centers. Examples of profit centers include branches of banks and other businesses; parts of a store also.

8. The Investment Center
An investment center incurs costs, expenses and generates revenues much like a profit center. An investment center also has control over the investment funds that are able to be used. Managers of investment centers are
evaluated on both the profitability of the center and the rate of return earned on the funds invested. Investment centers are often associated with subsidiary companies (another company holds more than 50% of its equity share capital).

9. Effecting the Business
This system is set in place for many reasons, the big one being business growth and organization. Each center has a manager that oversees operation and the reporting required this gives the business the ability to hold someone accountable when things are not going as they should. When each part does their jobs correctly, reporting is accurate and can be used as a basis for budgeting and other business decisions.

10. Your Role
Each of you have been chosen to work for this company because we believe you have what it takes to function in your specific departments. You are the face of our company. You keep our records together and ensure accuracy which is necessary to keep a business running.

11. References Revenue (2008). Retrieved February 22, 2009 from