Responsibility Accounting Benefits Analysis

Responsibility accounting is a system where managers are held accountable for specific activities and results within their area of control. It helps in performance evaluation and control.

Evaluating the Benefits

• Statement (a): Centralisation vs. Decentralisation
  Responsibility accounting aligns better with decentralisation, where decision-making is pushed down to lower levels responsible for specific segments. Centralisation implies decisions are made at the top. Thus, statement (a) is incorrect.
• Statement (b): Closer Control
  By defining responsibility areas and measuring performance within them, management can monitor activities more effectively, leading to tighter operational oversight and closer control. Thus, statement (b) is correct.
• Statement (c): Objective Performance Measurement
  This system establishes benchmarks (like budgets or standards) against which the performance of a specific manager or department can be objectively evaluated. Thus, statement (c) is correct.
• Statement (d): Cost Consciousness
  Holding managers accountable for the costs within their responsibility centers encourages them to manage expenses efficiently, fostering a sense of cost consciousness. Thus, statement (d) is correct.

Summary of Benefits

The key benefits derived from responsibility accounting, based on the analysis, are:

• It provides a system of closer control (b).
• It measures the performance of individuals in an objective manner (c).
• It develops a sense of cost consciousness among managers and their subordinates (d).

Therefore, statements (b), (c), and (d) accurately represent the benefits of responsibility accounting.