Identify the combination of statements which are correct.

A. The term 'Investment Centre' belongs to Return on Investment

B. The term 'Investment Centre' belongs to Responsibility Accounting

C. The term 'Revenue Centre' belongs to Ratio analysis

D. The term 'Cost Centre' does not belongs to Ratio Analysis

E. The term 'Profit Centre' belongs to Responsibility Accounting

Choose the correct answer from the options given below :

B, D and E only

The correct answer is option (4)- B, D and E only.

A. The term 'Investment Centre' belongs to Return on Investment. THIS IS FALSE as the term 'Investment Centre' belongs to Responsibility Accounting.

B. The term 'Investment Centre' belongs to Responsibility Accounting. THIS IS TRUE.

C. The term 'Revenue Centre' belongs to Ratio analysis. THIS IS FALSE as the term 'Revenue Centre' belongs to Responsibility Accounting.

D. The term 'Cost Centre' does not belongs to Ratio Analysis. THIS IS TRUE. 

E. The term 'Profit Centre' belongs to Responsibility Accounting. THIS IS TRUE. 

Responsibility accounting is a system of accounting in which different sections, divisions and departments of an organisation are set up as ‘Responsibility Centres’. The head of the centre is responsible for achieving the target set for his centre. Responsibility centres may be of the following types:

1. Cost Centre: A cost or expense centre is a segment of an organisation in which managers are held responsible for the cost incurred in the centre but not for the revenues. For example, in a manufacturing organisation, production department is classified as cost centre.

2. Revenue Centre: A revenue centre is a segment of an organisation which is primarily responsible for generating revenue. For example, marketing department of an organisation may be classified as a revenue center.

3. Profit Centre: A profit centre is a segment of an organisation whose manager is responsible for both revenues and costs. For example, repair and maintenance department of an organisation may be treated as a profit center if it is allowed to bill other production departments for the services provided to them.

4. Investment Centre: An investment centre is responsible not only for profits but also for investments made in the centre in the form of assets.