Which statement best describes the function of cost centres in financial management?

The function of cost centres in financial management primarily revolves around tracking expenses associated with a specific segment of the organization. Cost centres are distinct divisions or departments within a company where costs are incurred but are not directly tied to revenue generation. By focusing on these segments, businesses can closely monitor and manage costs, identify areas of inefficiency, and improve overall budgeting practices. This detailed tracking allows management to understand how resources are allocated, enabling them to make informed decisions about operational performance and potential areas for cost savings or improvements.

In contrast, the other statements relate to different areas of financial management. Measuring profitability involves analyzing revenues against costs but is more aligned with profit centres, not cost centres. Evaluating debt levels focuses on the financial obligations of the organization rather than tracking specific departmental expenses. Lastly, forecasting sales revenue pertains to predicting future income from sales activities, which is distinct from the purpose of cost centres that concentrate solely on managing and monitoring costs rather than revenue generation.