Question

Which of the following describes responsibility accounting? a.The process of measuring and reporting operating data by manager's area of expertise b.The process of measuring and reporting customer data by responsibility center c.The process of measuring and reporting financial data by responsibility center d.The process of measuring and reporting operating data by responsibility center

Answer 1

The process of measuring and reporting financial data by responsibility center (option c) well describes responsibility accounting.

Step-by-step explanation:

The cost of production is closely monitored by all the departments running in the company. It can be controlled only in the process of accounting records all the data of budget forecasting and future recommendations. Every month all the officials from different business sections need to provide financial data. Such operations of all the divisions are collectively called as responsibility center.

The control of the budgeting process lies helps the finance department to fix the parameters for avoiding overhead costs. It mainly acts as a planning source to take an abrupt financial decision to reap more profits against cost constraints which may hinder the financial growth of the business.