TBS - Responsibility Accounting System

Question 1

Responsibility Accounting System

Answer 1

one that evaluates center managers based on reports that include only revenues and costs that a particular manager can control.

Question 2

Profit Center

Answer 2

When a manager is responsible for both revenues and costs

Question 3

Cost Center

Answer 3

When a manager is only responsible for costs

Question 4

Advantage of a responsibility accounting system

Answer 4

Managers are rewarded based on factors that are within their control, creating a direct relationship between their performance and their performance evaluation. This gives responsibility accounting a significant advantage over traditional accounting with respect to management evaluations