RESPONSIBILITY ACCOUNTING

Presented by-DIPTI MANJUSHA

KACHHAP
Roll no-17
Flow of the presentation
 Brief about responsibility accounting
 Its characteristics
 Steps in responsibility accounting
 Responsibility centers( profit, cost and
investment centers)
 Transfer prices
 Advantages and disadvantages of
responsibility accounting
Responsibility Accountability
The systems of costing like standard costing and budgetary
control are useful to management for controlling the costs. In
those systems the emphasis is on the devices of control and not
on those who use such devices. Responsibility Accounting is a
system of control where responsibility is assigned for the control
of costs. The persons are made responsible for the control of
costs.
Definitions
Charles,T. Horngreen:
“Responsibility accounting is a system of accounting that recognizes various
responsibility centres throughout the organisation and reflects the plans and
actions of each of these centres by assigning particular revenues and costs to
the one having the pertinent responsibility. It is also called profitability
accounting and activity accounting”. According to this definition, the
organisation is divided into various responsibility centres and each centre is
responsible for its costs. The performance of each responsibility centre is
regularly measured.
Louderback and Dominiak:
“Responsibility accounting is the name given to that aspect of the managerial
process dealing with the reporting of information to facilitate control of
operations and evaluation of performance.”
Charles T. Horngren:
“Responsibility accounting is a system of accounting that recognises various
decision centres throughout an organisation and traces costs to the individual
managers who are primarily responsible for making decisions about the cost
in questions.