“RESPONSIBILITY ACCOUNTING”. A RESEARCH PROJECT MATERIAL ON ACCOUNTING

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“RESPONSIBILITY ACCOUNTING”. A RESEARCH PROJECT MATERIAL ON ACCOUNTING

PREFACE

This subject is called “Responsibility Accounting which is third type of management accounting information and describes the organizational structure in which the management control takes place.  It focuses on three types of responsibility centers called expense centers, profit centers and investment centers.The characteristics of each of these organization units are given and the accounting information that is appropriate for each of them is described.An essential characteristic of responsibility accounting is that it focuses on responsibility centers.  This difference in focus is what distinguishes responsibility accounting from the full cost accounting.Full cost accounting, though not the subject of this paper, focuses on products rather than responsibility centers.  Although full cost accounting does make use of cost centers are used merely as a means to an end.  The emphasis is on the cost of the products and the cost center is used as a means of assembling item of cost so that they can be assigned product.

 

CHAPTER ONE

INTRODUCTION

Responsibility accounting is the third type of management accounting information.  It is called by that name because the accounting information is structured according to organization units, which are responsibility centers.  Responsibility accounting collects and reports information that is used in an important management function and management control.

RESPONSIBILITY ACCOUNTING

DEFINITION

An information system designed to a measure the performance of that segment of a business for such a given manager is responsible is often referred to as “responsibility accounting system”.

 

A responsibility accounting system should reflect the plans and performance of each organization.  It is designed to provide timely information for decision making and for the evaluation of performance.  In addition to being timely such information should highlight deviations of actual performance from planned performance so that appropriate corrective action can be taken.  All items of expense are the responsibility of an individual and should be charged to that individual at the point of origin.  In other words, expenses should be viewed as the responsibility of the manger of the organizational unit where costs originated.  The manager at this level is authorized to incur expenses and he is in a position to exercise direct control over them.

RESPONSIBILITY CENTRE

An organization has one or more leaders who are called managers who lead members of an organization to accomplish the organizational goals and objectives.  Managers user worker whom they motivate, take decisions on the resources that are available and set about in achieving the organizational goals and objective of either providing services or tangible goods.

 

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“RESPONSIBILITY ACCOUNTING”. A RESEARCH PROJECT MATERIAL ON ACCOUNTING

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