Martin LeFevre is an accountant who has worked with many large organizations, including the largest produce growing operation in the state of Florida.
Accounting that helps decision-makers in organizations make better choices, be in control, and plan more effectively is called managerial accounting. Managerial accountants primarily deal with two kinds of business units. These two kinds are profit centers and cost centers.
Profit centers are separate units that generate sales revenue and have their own expenses. A profit center can be a store, territory, line of products, or distribution channel. Managerial accountants usually follow the organizational structure in creating statements and providing relevant information to the managers. It is up to a business to decide how it looks at its activities.
Cost centers are departments or units within the organizations that have costs and expenses but do not generate any revenue. Examples of cost centers include the human resources department, the legal department, and the security department. The managers in charge of these departments need accounting information to stay informed about the costs of running their units.
The reports for cost centers are usually very straightforward. They have a lot of detailed information, details of all the costs and expenses, budgeted targets, and comparisons with previous report periods. This does not necessarily mean that template creation for such reports is simple or easy.
However, things usually get much more complicated with reports for profit centers because even a small business can have a variety of sources of profit. There are no definitive rules for classification of costs or sales revenues with the objective of profit identification in business or accounting. Every business has to make its own decisions in regards to this matter. This is something experienced accountants like Martin LeFevre can often help them with by sharing their thoughts and best practices.
Accounting that helps decision-makers in organizations make better choices, be in control, and plan more effectively is called managerial accounting. Managerial accountants primarily deal with two kinds of business units. These two kinds are profit centers and cost centers.
Profit centers are separate units that generate sales revenue and have their own expenses. A profit center can be a store, territory, line of products, or distribution channel. Managerial accountants usually follow the organizational structure in creating statements and providing relevant information to the managers. It is up to a business to decide how it looks at its activities.
Cost centers are departments or units within the organizations that have costs and expenses but do not generate any revenue. Examples of cost centers include the human resources department, the legal department, and the security department. The managers in charge of these departments need accounting information to stay informed about the costs of running their units.
The reports for cost centers are usually very straightforward. They have a lot of detailed information, details of all the costs and expenses, budgeted targets, and comparisons with previous report periods. This does not necessarily mean that template creation for such reports is simple or easy.
However, things usually get much more complicated with reports for profit centers because even a small business can have a variety of sources of profit. There are no definitive rules for classification of costs or sales revenues with the objective of profit identification in business or accounting. Every business has to make its own decisions in regards to this matter. This is something experienced accountants like Martin LeFevre can often help them with by sharing their thoughts and best practices.
