Benefits of Responsibility Accounting

10 October 2016

Better System of Control It enables the management to management to delegate authority to responsibility centres while remaining overall control with itself. 2) 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. 3) Comparison of Performance It encourages the comparison between Actual Achievements with Budgeted figures.

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It compels the setting of realistic goal. 4) 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. 5) Simplifies the structure of reports and facilitates the prompt reporting  Because of exclusion of those items which are beyond the scope of individual responsibility. ANSWER 2 1) Better System of Control It enables the management to management to delegate authority to responsibility centres while remaining overall control with itself.

For the purpose of exercising best managerial control over the affairs of the organization & achieving the desired goal, responsibility accounting system & budgetary control system can work together. 2) Comparison of Performance It encourages the comparison between Actual Achievements with Budgeted figures. It compels the setting of realistic goal. As realistic goals are fixed for a responsibility centre, its achievement by the employees becomes easy.

Their contribution can be assessed by themselves for the purpose of achieving the goal of the organization as a whole. A sense of belonging to the organization is created among the employees by the systematic responsibility accounting as the reward of the employees for accomplishment is not unsatisfactory 3) 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.

As managers of responsibility centers are allowed to sit with the top management for exchanging of views & opinions, appropriate decision making is almost assumed. 4) 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. 5) Provides top management with more time to make policy decisions and engage in strategic planning. Allows management to avoid understanding the system by using top down remote control based on accounting measurements.

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