Profit Centre

Profit Centre is a section, a department, a function or item within the organization that consumes/incurs costs and at the same time directly generate profits for the organization. In other words, it is a Centre with which costs and profits may be ascertained to at the same time.

For instance, if department L, M and N are the departments where products L, M and N are produced, respectively, then the respective departments are profit Centre.

NB1: Other Centre such as accounting and finance department, stores department, and administration department do not directly generate profits, hence they do not qualify to be termed as profit Centre.

NB2: All profit Centre are Cost Centre but not all Cost Centre are profit Centre


About the Author - Dr Geoffrey Mbuva(PhD-Finance) is a lecturer of Finance and Accountancy at Kenyatta University, Kenya. He is an enthusiast of teaching and making accounting & research tutorials for his readers.