RESPONSIBILITY ACCOUNTING

  • Type: Project
  • Department: Accounting
  • Project ID: ACC0565
  • Access Fee: ₦5,000 ($14)
  • Chapters: 3 Chapters
  • Pages: 42 Pages
  • Methodology: Descriptive
  • Reference: YES
  • Format: Microsoft Word
  • Views: 6.7K
  • Report This work

For more Info, call us on
+234 8130 686 500
or
+234 8093 423 853
RESPONSIBILITY ACCOUNTING
PREFACE

This subject is called “Responsibility Accounting which is third type of management accounting information and describes the organizational structure in which the management control takes place.  It focuses on three types of responsibility centers called expense centers, profit centers and investment centers.The characteristics of each of these organization units are given and the accounting information that is appropriate for each of them is described.An essential characteristic of responsibility accounting is that it focuses on responsibility centers.  This difference in focus is what distinguishes responsibility accounting from the full cost accounting.Full cost accounting, though not the subject of this paper, focuses on products rather than responsibility centers.  Although full cost accounting does make use of cost centers are used merely as a means to an end.  The emphasis is on the cost of the products and the cost center is used as a means of assembling item of cost so that they can be assigned product.
TABLE OF CONTENT
CHAPTER ONE
1.1         Introduction                                                                    
1.2         Responsibility accounting                                        
1.3         Responsibility center                                                        
1.4         Types of responsibility centers                                          
1.5         Expense center                                                                
1.6         Profit center                                                                    
1.7         Investment center                                                            
CHAPTER TWO
2.1         Management control process                                             
2.2         Steps in management control                                            
2.3         Type of budget                                                                
2.4         The cash budget                                                              
2.5         Uses of budget                                                                
2.6         Budget preparation                                                 
2.7         Reporting and analysis                                                     
CHAPTER THREE
3.1         Control reports and their uses    
3.2         Information reports                                                
3.3         Performance reports                                                         
3.4         Technical criteria for report                                               
3.5         Summary                                                                        
BIBLIOGRAPHY                                                                         
CHAPTER ONE
INTRODUCTION
Responsibility accounting is the third type of management accounting information.  It is called by that name because the accounting information is structured according to organization units, which are responsibility centers.  Responsibility accounting collects and reports information that is used in an important management function and management control.
RESPONSIBILITY ACCOUNTING
DEFINITION
An information system designed to a measure the performance of that segment of a business for such a given manager is responsible is often referred to as “responsibility accounting system”.
 A responsibility accounting system should reflect the plans and performance of each organization.  It is designed to provide timely information for decision making and for the evaluation of performance.  In addition to being timely such information should highlight deviations of actual performance from planned performance so that appropriate corrective action can be taken.  All items of expense are the responsibility of an individual and should be charged to that individual at the point of origin.  In other words, expenses should be viewed as the responsibility of the manger of the organizational unit where costs originated.  The manager at this level is authorized to incur expenses and he is in a position to exercise direct control over them.
RESPONSIBILITY CENTRE
An organization has one or more leaders who are called managers who lead members of an organization to accomplish the organizational goals and objectives.  Managers user worker whom they motivate, take decisions on the resources that are available and set about in achieving the organizational goals and objective of either providing services or tangible goods.
 A manager can conveniently supervise a limited number of subordinates, which the Old Testament writes put at ten.  However, this number could be varied depending on the nature of the job to be done and on the personality and skill of the manger.  It therefore, follows that in an organization there must be more than one manager and there must be several layers of managers in the organistion of a company.  Authority runs from the top unit down through the successive layers which is called “Organistion hierarchy”.  In an organization, the top line units are called divisions and within each division there are a number of departments and within each department there are a number of sections, all with leaders and supervisors.
Each of the organization unit is headed by a manager who is responsible for the work done by the unit.  These organization units are called responsibility centers which is simply an organization unit headed by a responsible manager.  The manager is responsible in the sense that it is the duty of manager to see that the organization unit does its part in achieving the goals of the whole organization.
The responsibility center uses resources.  These are its input.  It works with these resources.  People are involved in this process as well as machines, stock and other tangible things.  As a result of this work outputs are produced in the form of goods if they are tangible and services it they are intangible.  Those goods or services go either to other responsibility centers within the organistion or to customers in the outside world.  The information given by the below diagram can be classified as either accounting information or non-accounting information.  Although we are   interested primarily in accounting information, much of non-accounting information is relevant in understanding what has happened in a responsibility center.
Accounting measures inputs in terms of cost.  Although the resources used are physical things such as grammes of materials and hours of labour, for the purpose of management contorl system.  It is necessary to measure these physical things with some common denominator called money.  The monetary measure of the resources used in a responsbility centre is cost.  In addition to cost information non-accounting inforamtion on such matter as the physical quality of material used, its quality, the skill level of the workforce, and so on, is also useful.
Accounting meausres outputs in terms of revenues for those goods and services of the responsibility centre that are sold to outside customers.  In some cases,  but not always accounting also measures revenues for goods and services that are furnished by the responsbility  centre to another responsibility centre within the organistion wieh such a monetary measure of output is not feasible, a non-montary measure of putput, such as the number of units of product produces, may be used as a substitute.
 To understand what has happened in a responsibility centre managers need information about the inputs to that responsbility centre, expressed as costs, and if feasible, information about the outputs the responsibility center, expressed as revenue.  In addition to this historical informaion, managers also need information about estimated future inputs and output as an aid in planning the activities of the responsibility centre.  The type of managemnt accounting that is used for these purpose is called responsibility accounting.
 Responsibility accounting collects and reports planned and actual accounting information about the inputs and outputs or responsibility centre.  Unlike the construction of differential costs and revenues, which is tailor-made for each problem responsibility accounting involves a continuous flow of information and outputs from responsibility centres.
 An essential characteristic of responsbility accounting is that it focuses on responsibility centre.  It is this difference in focus that distinguishes responsibility accounting from the full cost accounting.  Full cost accounting focuses on products rather than on responsibility centres.  Although full cost accounting does make use of cost centres, most of which are also responsibility centres, cost centres are used merely s a means to an end.  The emphasis is on the cost of the products and the cost centre is used as a means of assembling items of cost so that they can be assigned to products.  However, this distinction does not imply that full cost accounting and responsibility accounting are two separate accounting system.  They are closely related and are more accurately described as two parts of the management accounting system
Responsibility accountiing is used to measure the performance fo managers and it influences the way managers behave.  There are two way aspects to the performance of the manger of a responsibility centre.  They are labelled afficiency and effectiveness.  They can be defined in terms of the input and outputs of a r responsibility centre.
EFFICIENCY
The goals of Greater Enugu Water Scheme is to produce enough water for the inhabitants of Enugu and if it achieves this aim with relatively little resources to produce the required quanity of water the scheme is said to be efficiency.  Thus, efficiency expresses a relationship between inputs and outputs.  Efficiency in this sense is the amount of output per unit of input or the amount of input per unit or output.
EFFECTIVENESS
The work of a responsibility centre is supposed to contribute to the overall goals of the larger organistion of which it is a part.  Its effectiveness is measured by how well it contributes to achieving these goals.  Effectiveness is the relationship between the output of a responsibility centre and the goals of the organisation
TYPES OF RESPONSIBILITY CENTRES
There are specifically three types of responsibility centres desicribed in terms of the elements of this ration:
 Return on investment =    Revenue – Expenses
                                             Investment
1.       An expense centre, in which accounting measures expenses
2.       A profit centre, in which accounting measures revenues and expenses and the difference between them which is profit.
3.       An investment centre, in which accounting meaures not only profit but also the investment used in earning the profit.
EXPENSE CENTRE
An expense centre is a responsibility centre in which input, but not output, are measures in monetary term.  Most department in a factory are both cost centres and expense centres, that is the cost clearled to the department are used both to measure the performace of the department manager.
PROFIT CENTRE
A profit centre is a responsibility centre in which input are meausred in terms of expenses and outputs are measured in terms of revenues.  In financial accounting revenue is recognised only when sales are made to outside customers, in management accounting revenue is defined as a monetary of the output of a profit centre in a given account period such as a mouth, whether or not the company realises the revenue in that period.  Profit meansures both effectiveness and efficienty.  The profit centre therefore, provides a powerful tool for measuring how well the manager of the profit centre has performed.  Where profit centres exist, accounting provides a broader, more inclusive measurement of performance than when accounting focuses on expenses centres, in which expenses not revenue are measured.
INVESTMENT CENTRE
An investment centre is a responsibility centre in which inputs are measured in terms of expenses and outputs are measured in terms of revenues, and in which assets employed are also measured.  An investment centre is the ultimate extension of the responsibility centre idea because it encompasses all the elements that are involved in the company’s overall goals of earing a satisfactory return on its investment.  Investment centres are normally used only for relatively large units that products and markets a line of products.  It has the effect of putting managers into business for themsleves to an even great extent than does the profit centre.  As a part of the total business a responsibility centre should also do its part in contributing to the overall return.  The return-on-investment (ROI) ratio is one way of measuring the performance of a business entity.  Return on investment is found by dividing income by the amount of assets employed.  The result is a percnetage.  It is a measure of investment centre performance tha corresponds to the return on total capital that is frequently calculated for the company as a whole.

RESPONSIBILITY ACCOUNTING
For more Info, call us on
+234 8130 686 500
or
+234 8093 423 853

Share This
  • Type: Project
  • Department: Accounting
  • Project ID: ACC0565
  • Access Fee: ₦5,000 ($14)
  • Chapters: 3 Chapters
  • Pages: 42 Pages
  • Methodology: Descriptive
  • Reference: YES
  • Format: Microsoft Word
  • Views: 6.7K
Payment Instruction
Bank payment for Nigerians, Make a payment of ₦ 5,000 to

Bank GTBANK
gtbank
Account Name Obiaks Business Venture
Account Number 0211074565

Bitcoin: Make a payment of 0.0005 to

Bitcoin(Btc)

btc wallet
Copy to clipboard Copy text

500
Leave a comment...

    Details

    Type Project
    Department Accounting
    Project ID ACC0565
    Fee ₦5,000 ($14)
    Chapters 3 Chapters
    No of Pages 42 Pages
    Methodology Descriptive
    Reference YES
    Format Microsoft Word

    Related Works

    ABSTRACT Auditing is a systematic examination of books, accounts, documents and vouchers of an organization to ascertain how far the financial statements present a true and fair view of the concern. It also ensures that the books of accounts are properly maintained by the concern as required by law. Auditing is defined as a systematic and... Continue Reading
    Abstract The study examined the impact of corporate social responsibility on the financial performance of Quoted oil and gas in Nigeria. The total population for the study is 200 staff of selected oil and gas companies in... Continue Reading
      CHAPTER ONE INTRODUCTION 1.1   BACKGROUND TO THE STUDY         Cost accounting (CA), which measures and reports financial and non-financial information related to the organization’s acquisition or consumption of resources , has an... Continue Reading
    ABSTRACT This study seeks to establish the relationship between Ethical Thoughts in Accounting and Accounting Practice, the objective is to specifically determine the extent to which principles in ethical standards such asIntegrity, Independence, Confidentiality, Professional Competence as well asObjectivity affect accounting practice.The method... Continue Reading
    INTRODUCTION Accounting Principles as a term is said to be a set of rules that govern accounting practices. They are rules that companies must follow when preparing and reporting financial statements. These principles are meant to be followed and adhered to in the determination and measurement of assets, liabilities, income and expenses for... Continue Reading
    PROBLEMS AND PROSPECTS OF ACCOUNTING FOR THE STUDENTS OF ACCOUNTING IN TERTIARY INSTITUTIONS TABLE OF CONTENTS CHAPTER ONE: INTRODUCTION 1.1 BACKGROUND OF THE STUDY 1.2 STATEMENT OF PROBLEMS 1.3 PURCHASE OF THE STUDY 1.4 SIGNIFICANCE OF THE STUDY 1.5 RESEARCH QUESTION 1.6 SCOPE CHAPTER TWO: 2.1 REVIEW OF RELATED LITERATURE 2.2 DEFINITION AND... Continue Reading
    Abstract  This title of the study was designed to determine the accounting skill needs of Business Education graduate for teaching Financial Accounting in secondary schools in Bauchi State. The study adopted survey research design which involved Financial Accounting teachers in the government-owned senior secondary schools. The population of the... Continue Reading
    1.1 INTRODUCTION Many people think of accounting as a highly technical field which can be understood only by professional accountants. Actually, nearly everyone practices accounting in one form or another on an almost daily basis We live in an era of accountability. Although, accounting has made sits most dramatic progress in the field of... Continue Reading
    1.1INTRODUCTION Many people think of accounting as a highly technical field which can be understood only by professional accountants.  Actually, nearly everyone practices accounting in one form or another on an almost daily basis We live in an era of accountability.  Although, accounting has made sits most dramatic progress in the field of... Continue Reading
    CHAPTE ONE 1.0 INTRODUCTION 1.1 Background of the Study Accounting standard can be regarded as the type of accounting prepared which: follow a laid down rife. It usually demands minimum level of disclosure and lay down principles which enable the accountant to specify the account prepared clearly and male a nice report based on the account... Continue Reading
    Call Us
    Get this work
    whatsappWhatsApp Us