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Profit Centre

Former Member
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Hi All,

What is profit centre

Whether all Profit centres are created only for revenue line items.



Accepted Solutions (0)

Answers (2)

Answers (2)

Former Member
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Profit centre is essentially a responsibility centre.

Any place where the management wants to analyse the operating result can be created as Profit centre.

No only Revenue is not a criteria to create a Profit Centre.

Profit Centre is an Organisational Unit.It is primarily decided in Enterprise structure for any customer.

The common trend is to identify Business line as Profit centre or Business Unit or Location as a Profit centre.

Well by the way let me know your case so that we can discuss more specifically.



Former Member
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Hi Krishna,

Profit center can be any management oriented organisational unit which is used for internal controlling purposes.

We can divide company into profit centers to analyze areas of responsibility and to delegate responsibility to different organisational unit.

Eg in case of hotel

Restaurant can be profit center,

Room service can be profit center

Gym can be profit center

Profit center accounting is used to drow internal balance sheets and profit and loss statements.

Profit centers are created for profit and loss as well as balancesheet items

In case of any further clarification kindly let me know.

If satisfied with the answer then please reward