Monday, March 19, 2012

What are the Advantages of Responsibility Accounting?

Better System of Control
It enables the management to management to delegate authority to responsibility centres while remaining overall control with itself
Decentralization of Decision Making
It forces the management to consider the organisational structure to result in effective delegation of authority and placement of responsibility.So it will compel individual manager to take right decision
Comparison of Performance
It encourages the comparison between Actual Achievements with Budgeted figures.It compels the setting of realistic goal
Increases the interest of staff
It increases the interest of supervisory staff as they are answerable about  deviations of  responsibility centers which they are responsible
Simplifies the structure of reports and facilitates the prompt reporting 
Because of exclusion of those items which are beyond the scope of individual responsibility




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