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15 Cards in this Set

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What is responsibility accounting?
Measurement of management performance based on what they can control.
In DECENTRALIZED organizations, management control is ususally established by...
Dividing the organization into segments, responsibility centers.
Name four types of responsibility centers.
Cost center, Revenue center, Profit center, Investment center
What is a cost center?
Segment of organization where NO REVENUE is generated & the manager is only responsible for costs.
Give examples of cost centers.
Service (custodial), staff (personnel), and production centers.
What is a Revenue center?
Organizational unit whose manager is responsible only for REVENUES.
Give examples of revenue centers.
Sales and Marketing depts
What is a Profit center?
Organizational unit whose manager is responsible for REVENUES and COSTS.
Give examples of profit centers.
Stores or product lines
What is an investment center?
An organizational unit whose manager is responsible for return on investments (revenues, costs, & profit)...the size of the profit in relation to the investment.
What is responsibility accounting in terms of the accounting field?
The accounting procedures and reports used to measure the performance of responsibility centers.
Management uses responsibility accounting to support...
Goal Congruence
What is goal congruence?
When the goals of individual segments/departments meet the goals of the entire organization
A fundamental concept of responsibility accounting is...
Controlibility...managers should only be responsible for what they can control.
Most managers should not be held responsible for which costs?
Depreciation and Insurance exp