Responsibility accounting systems should begin with:
A)A budget by center.
B)A performance report by center.
C)A measure of corporate performance.
D)A company-wide income statement.

Question

Quizplus · Accepted Answer

Responsibility accounting systems are based on the allocation of responsibility to individual managers or departments. Thus, the system should begin with developing budgets for each center (department or business unit) in the organization. These budgets are used to allocate resources and establish performance expectations. The performance reports and measures of corporate performance are developed and tracked after the budgets have been established. A company-wide income statement is a periodic summary of all financial transactions of the organization and is not directly related to the development of a responsibility accounting system.

Responsibility Accounting Systems Should Begin With