ECONOMICS

Detailed explanation-1: -The components of responsibility accounting include inputs and outputs, identification of responsibility center, target, and actual information, responsibility between organization structure and responsibility center, etc.

Detailed explanation-2: -According to this definition, responsibility accounting is used as a controlling device by top management for controlling the performance of other executives. The executives’ decisions are judged on the basis of their performance and they are made responsible for the outcome of their actions.

Detailed explanation-3: -There are three types of responsibility centers-expense (or cost) centers, profit centers, and investment centers. In designing a responsibility accounting system, management must examine the characteristics of each segment and the extent of the responsible manager’s authority.