Operating department income statements are used to evaluate the performance of ______ centers.Multiple choice question.profitrevenuecost

Identifying the Correct Option

1. Understanding the Choices:

   • Profit centers: These are parts of the organization that are responsible for both revenue generation and cost control, thereby creating profit.
   • Revenue centers: These centers are focused solely on generating income, without the responsibility of managing costs.
   • Cost centers: These units are primarily concerned with controlling costs, with no direct influence on revenue generation.

2. Application of Knowledge:

   • Operating department income statements provide insights into how well a department is generating profits by considering both revenues and costs.

3. Conclusion:

   • Since operating department income statements assess overall performance through the lens of profitability, the best fit for this context is profit centers.

Final Answer

Operating department income statements are used to evaluate the performance of profit centers.