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revenue center

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Definition of revenue center

Revenue Center Image 1

revenue center

a responsibility center for which a manager is accountable only for the generation of revenues and has no control over setting selling prices, or budgeting or incurring costs



Related Terms:

activity center

a segment of the production or service
process for which management wants to separately report
the costs of the activities performed


Commodities Exchange Center (CEC)

The location of five New York futures exchanges: Commodity
Exchange, Inc. (COMEX), the New York Mercantile exchange (NYMEX), the New York Cotton Exchange,
the Coffee, Sugar and Cocoa exchange (CSC), and the New York futures exchange (NYFE). common size
statement A statement in which all items are expressed as a percentage of a base figure, useful for purposes of
analyzing trends and the changing relationship between financial statement items. For example, all items in
each year's income statement could be presented as a percentage of net sales.


cost center

a responsibility center in which the manager has
the authority to incur costs and is evaluated on the basis
of how well costs are controlled


Distribution center

A branch warehouse containing finished goods and service
items intended for distribution directly to customers.


Fictitious Revenue

revenue recognized on a nonexistent sale or service transaction.



incremental revenue

the revenue resulting from an additional contemplated sale


Industrial revenue bond (IRB)

Bond issued by local government agencies on behalf of corporations.


Revenue Center Image 2

Internal Revenue Code

Refers to all federal tax laws as a group.


Internal Revenue Service

A federal agency empowered by Congress to interpret and enforce tax-related laws.


investment center

a responsibility center in which the manager
is responsible for generating revenues and planning
and controlling expenses and has the authority to acquire,
dispose of, and use plant assets to earn the highest rate
of return feasible on those assets within the confines and
to the support of the organization’s goals


Money center banks

Banks that raise most of their funds from the domestic and international money markets, relying less on depositors for funds.


NET SALES (revenue)

The amount sold after customers’ returns, sales discounts, and other allowances are taken away from
gross sales. (Companies usually just show the net sales amount on their income statements, omitting returns, allowances, and the like.)


Premature Revenue

revenue recognized for a confirmed sale or service transaction in a period
prior to that called for by generally accepted accounting principles.


profit center

a responsibility center in which managers are responsible for generating revenues and planning and controlling all expenses


Profit center

An entity within a corporation against which both revenues and costs are
recorded. This results in a separate financial statement for each such entity, which
reveals a net profit or loss, as well as a return on any assets used by the entity.


pseudo microprofit center

a center for which a surrogate
of market value must be used to measure output revenue


Revenue Center Image 3

real microprofit center

a center whose output has a market value


Realizable Revenue A revenue transaction where assets received in exchange for goods and

services are readily convertible into known amounts of cash or claims to cash.



Realized Revenue

A revenue transaction where goods and services are exchanged for cash or
claims to cash.


Reinvoicing center

A central financial subsidiary used by an MNC to reduce transaction exposure by having
all home country exports billed in the home currency and then reinvoiced to each operating affililate in that
affiliate's local currency. It can also be used as a netting center.


responsibility center

a cost object under the control of a manager


Revenue

Income earned from the sale of goods and services.


Revenue

Amounts earned by the company from the sale of merchandise or services; often used interchangeably with the term sales.


Revenue

An inflow of cash, accounts receivable, or barter from a customer in exchange
for the provision of a service or product to that customer by a company.


Revenue bond

A bond issued by a municipality to finance either a project or an enterprise where the issuer
pledges to the bondholders the revenues generated by the operating projects financed, for instance, hospital
revenue bonds and sewer revenue bonds.


revenue-driven expenses

Operating expenses that vary in proportion to
changes in total sales revenue (total dollars of sales). Examples are sales
commissions based on sales revenue, credit card discount expenses, and
rents and franchise fees based on sales revenue. These expenses are one
of the key variables in a profit model. Segregating these expenses from
other types of expenses that behave differently is essential for management
decision-making analysis. (These expenses are not disclosed separately
in externally reported income statements.)


Revenue fund

A fund accounting for all revenues from an enterprise financed by a municipal revenue bond.


Revenue Center Image 4

Revenue Recognition

The act of recording revenue in the financial statements. revenue should
be recognized when it is earned and realized or realizable.



Sales Revenue Revenue recognized from the sales of products as opposed to the provision of

services.


Service Revenue

revenue recognized from the provision of services as opposed to the sale of
products.


Total revenue

Total sales and other revenue for the period shown. Known as "turnover" in the UK.


Unearned revenue

Money that has been paid by customers for work yet to be done or goods yet to be provided.


Unearned revenue

A payment from a customer that cannot yet be recognized as earned
revenue, because the offsetting service or product for which the money was paid has
not yet been delivered.



 

 

 

 

 

 

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