What are the necessary conditions for an effective responsibility accounting system in an organisation?
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What are the conditions of responsibility accounting?Responsibility Accounting is a system of accounting where specific individuals are made responsible for accounting in particular areas of cost control. In this accounting system, responsibility is assigned based on knowledge and skills. If the costs increase, the person assigned is held accountable and answerable.
How would you set up a system of responsibility accounting in an organization?The objective behind maintaining accounts by way of responsibility accounting is to:. Examine the levels of responsibility.. Bifurcate organizational objectives between departments.. Create responsibility centres.. Find out the contribution of the individual departments.. Define accountability based on responsibility.. What is the most important for responsibility accounting?One of the most important phases of responsibility accounting is establishing standard costs and evaluating performance by comparing actual costs with the standard costs.
What is responsibility accounting and what is its importance to an organisation?Responsibility accounting is a kind of management accounting that is accountable for all the management, budgeting, and internal accounting of a company. The primary objective of this accounting is to support all the Planning, costing, and responsibility centres of a company.
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