Responsibility accounting is a system that measures the plans and actions of responsibility...

Question:

Responsibility accounting is a system that measures the plans and actions of responsibility centers. As such, it:

a. Affects human behavior.

b. Requires subdividing all management levels.

c. Is most appropriate at the top levels of the organization.

d. Is closely tied to the master budget.

Management Accounting:

Management accounting is a branch of accounting that focuses on the internal financial statement users, particularly the corporation's management. However, in management accounting, most of the information cannot be used for external reporting or financial reporting.

Answer and Explanation:

The correct choice is d. Is closely tied to the master budget.

Responsibility accounting is tied to the master budget as the purpose is to let the top and middle management to assign responsibility for maximizing the allocated budget per department or responsibility centers. For responsibility accounting to be effective, all objectives and targets must be clear to the managers and performance must be monitored regularly.


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The Role of Cost Accounting in Management

from NYSTCE Business and Marketing (063): Practice and Study Guide

Chapter 14 / Lesson 9
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