Question

In a responsibility accounting reporting system, as one moves up each level of responsibility in information. True or false

Answer 1

option is True

In a responsibility accounting reporting system, as one moves up each level of responsibility in an organization, the responsibility reports become more summarized and show less detailed information.

Because the amount of detail varies depending on the manager’s level in the organization. A performance report to a department manager of a retail store would include actual and budgeted dollar amounts of all revenue and expense items under that supervisor’s control. The report issued to the store manager would show only totals from all the department supervisors’ performance reports and any additional items under the store manager’s control, such as the store’s administrative expenses. The report to the company’s president includes summary totals of all the stores’ performance levels plus any additional items under the president’s control. In effect, the president’s report should include all revenue and expense items in summary form because the president is responsible for controlling the profitability of the entire company.

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