Chapter 7: Financial Responsibility Centres

Question 1

What are the core elements of financial responsibilty centres?

Answer 1

• Financial responsibility
• Planning / Budgeting
• Incentive contracts

Question 2

Name the advantages of financial results control systems!

Answer 2

+ financial objectives are paramount in for-profit firms
+ provide a summary measure of performance
+ most measures are relatively precise and objective
+ cost of implementation is often relatively small

Question 3

How is a financial responsibility centre defined?

Answer 3

The individuals responsibilities are at least partially defined in financial terms.

Question 4

What are the types of financial responsibility centres?

Answer 4

1.) Investment Centres
2.) Profit Centres
3.) Revenue Centres
4.) Cost Centres