A Responsibility Accounting System

question 83

Multiple Choice

A responsibility accounting system:

• A) Is designed to measure the performance of managers in terms of controllable costs.
• B) Assigns responsibility for costs to the appropriate managerial level that controls those costs.
• C) Should not hold a manager responsible for costs over which the manager has no influence.
• D) Can be applied at any level of an organization.
• E) All of these.

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Definitions:

Matching Principle

An accounting principle that expenses should be recorded in the same period as the revenues they helped to generate, to provide a more accurate picture of financial performance.

Deferrals

Accounting transactions that involve recognition of revenues or expenses in a period different from when they are actually received or paid, to match revenues with expenses in the appropriate period.

Accruals

Accounting adjustments for revenues that have been earned or expenses that have been incurred but are not yet recorded in the accounts.

Deferred Revenue

Money received by a company for goods or services not yet delivered or performed, recorded as a liability until the transaction is completed.