Large business organizations have huge operating activities. With a total responsibility and authority over the entire organization, it often gets difficult for the top management of the company to look into each and every aspect of such voluminous activities. To control the activities efficiently, the total authority is decentralized and divided into small groups.
It is this decentralization of responsibility that is termed as ‘responsibility accounting’. It is similar to other cost systems but with larger emphasis on setting up the responsibility assigned and it’s execution. The performance of each responsibility center is evaluated based in terms of its pre-planned target.
Defining Responsibility Accounting
According to Robert Anthony, responsibility accounting is a type of management accounting that collects and reports pre-determined and actual information in terms of responsibility centres.
Eric Kohler has defined responsibility accounting as an accounting method where costs are recognized with people who are assigned to control it rather than with products or services.
Necessities of Efficient Responsibility Accounting
Objectives of Responsibility Accounting
Principles of Responsibility Accounting
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