What is Profit Centre Accounting?

Profit Center Accounting (PCA) is an accounting method that divides a company into individual profit centers, each responsible for its own revenues and expenses. It's used to evaluate the performance of individual business units or departments within a larger organization. By treating these units as separate profit-generating entities, businesses can identify areas of strength and weakness, improve resource allocation, and make more informed management decisions. PCA typically involves assigning costs and revenues to the relevant profit centers, allowing for the calculation of profit and loss for each center.