Responsibility accounting is a good tool for businesses to use when allocating and
identifying cost and sales. Responsibility accounting is separating revenues and expenses to
different cost centers in a business. Responsibility accounting allows for financial reports to be
made for each manager showing the expenses and revenues they control. This allows them to be
accountable for what they can control.
I have had experience with this when doing accounting for a restraint and bar. Each invoice
received from vendors included drinks, food, alcohol, as well as supplies. Each department head
was responsible for managing their own budget, and then the bar manager was responsible for
managing all budgets. For instance, when any given invoice was received, the items where then
broken down by department, or responsibility center, placed as their expense and then shown on
the financials for that department. This is useful as it shows the bar budget, by itself, not being
effected by the rest of the business. Benefits of using this tool are the ability for managers at lower
levels to be able to separate their own controllable cost and revenue, as well as for management
to separate cost to different cost centers.
This tool is useful as a way for tracking as well as planning as it can be used for more
detailed budgeting as well. It also helps solidify the chain of command. It allows for upper level
managers to hold each cost driver below them accountable for their own cost responsibilities.
Romney, M. B., Steinbart, P. J., Summers, S. L., & Wood, D. A. (2020). Accounting Information
Systems (15th ed.). Pearson Education (US
