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
TITLE PAGE II
APPROVAL PAGE III
TABLE OF CONTENT VIII
1.1 Introduction 1
1.2 Responsibility accounting 1
1.3 Responsibility center 2
1.4 Types of responsibility centers 8
1.5 Expense center 9
1.6 Profit center 9
1.7 Investment center 10
2.1 Management control process 12
2.2 Steps in management control 14
2.3 Type of budget 15
2.4 The cash budget 17
2.5 Uses of budget 20
2.6 Budget preparation 23
2.7 Reporting and analysis 23
3.1 Control reports and their uses 25
3.2 Information reports 25
3.3 Performance reports 26
3.4 Technical criteria for report 27
3.5 Summary 29