Question

What is responsibility accounting and what is its importance to an organisation? Discuss in 100 to 120 words.

Answer 1

Responsibility accounting is a basic idea of accounting execution estimation frameworks. The essential thought is that extensive expanded associations are troublesome, if not difficult to oversee as a solitary portion, subsequently they should be decentralized or isolated into reasonable parts. These parts, or portions are alluded to as responsibility centers that include:

1. Revenue centers,

2. Cost centers,

3. Profit centers, and

4. Investment centers.

Responsibility accounting has been an acknowledged piece of conventional accounting control frameworks for a long time since it furnishes an association with various focal points. Maybe the most convincing contention for the responsibility accounting approach is that it gives an approach to deal with an association that would some way or another be unmanageable. Moreover, doling out responsibility to bring down level supervisors enables more elevated amount chiefs to seek after different exercises, for example, long haul arranging and strategy making. It additionally gives an approach to rouse bring down level directors and laborers. Supervisors and specialists in an individualistic framework have a tendency to be persuaded by estimations that accentuate their individual exhibitions. In any case, this accentuation on the execution of people and individual portions makes what a few faultfinders allude to as the "stovepipe association." Others have utilized the expression "useful storehouses" to portray a similar thought.