In a responsibility accounting system:
A) Outputs of the departments are not part of the evaluation process.
B) All managers at a given level have equal authority and responsibility.
C) Each accounting report contains all items allocated to a responsibility center.
D) Managers are responsible for their departments' controllable costs.
E) Organized and clear lines of authority and responsibility are only incidental.

Question

Quizplus · Accepted Answer

In a responsibility accounting system, managers are held accountable for their department's controllable costs. This means that they have the responsibility to manage and control the costs that are associated with their department's operations. The other options are incorrect as outputs of the departments are part of the evaluation process, managers at a given level do not necessarily have equal authority and responsibility, accounting reports may not necessarily contain all items allocated to a responsibility center, and organized and clear lines of authority and responsibility are essential components of a responsibility accounting system.

In a Responsibility Accounting System