Responsibility accounting
Accountability accounting involves accounting and budgeting an internal company. The aim is to plan and control the responsibility of a company to visit centers such as departments and decentralized divisions.
Accounting is the preparation of the annual and monthly budgets for each account center. The reported reports represent the actual amounts for each budget item and the difference between the budget and the actual quantities. In the sense that the actual transactions of the company are classified by a responsible center, which creates a monthly report.
The liability account allows the company to have a manager's responsibility center to maintain the manager's performance in the monthly comments.
Responsibility Centre
Responsibility The responsibility for the authority of the authorities is the responsibility of the authorities. The detailed graphic of the company is a logical resource for the use of technology. The most common centers of responsibility are your departments within a company. If the CEO of a company can make a decision. When a manager can control costs and revenue, the center is known as a profit center. It is the responsibility of the authorities to determine the cost of the goods and the cost of the goods. Management and cost managers are responsible for the overlay. Production cost centers and the production department. Other services, IT department, accounting and so on. Concentration centers have no boundaries for departments. There could be several cost centers in an apartment. For example, each assembly line could be a cost center. Also a special machine could be a cost center. Here you can go to the center of the city. The center of the city is in the center of the city. The centers of income of competent centers where they are. Salaries, commissions and production costs have worked. Performance centers exceed total costs. As a result, the Benefits Center Administrator is responsible for the Center's revenue, costs and benefits. A profit center is a center of responsibility and the investment center. It is the capital of the inverse. In fact, it is not the case that there is a default risk. The development of the value of an investment cen- tre takes place in the form of assets and capital. Transfer Pricing
The amount charged when one division sells goods or services to another division is called transfer price.
The basic purpose of transfer pricing is to induce optimal decision making in a decentralized organization (i.e., in most cases, to maximize the profit of the organization as a whole).
Purposes of Transfer Pricing
There are two main reasons for instituting a transfer pricing scheme:
• Generate separate profit figures for each division and thereby evaluate the performance of each division separately.
• Help coordinate production, sales and pricing decisions of the different divisions (via an appropriate choice of transfer prices). Transfer prices make managers aware of the value that goods and services have for other segments of the firm.
• Transfer pricing allows the company to generate profit (or cost) figures for each division separately.
• The transfer price will affect not only the reported profit of each center, but will also affect the allocation of an organization’s resources.
Main objectives of a transfer pricing system
1. To achieve goal congruence: The transfer prices should be such that actions which will have the effect of increasing a division’s reported profit will also have the effect of increasing the company’s reported profit. This maximises the likelihood that the division managers will act in the company’s best interests.
2. To ensure that divisional autonomy is maintained: In principle the top management of a company could simply issue precise instructions to divisions as to what goods to transfer to each other, in what quantities, and at what prices. This would seem to solve the problem of transfer pricing at a stroke, and to achieve optimization (for the company as a whole) by diktat. However, most organizations are unwilling to go down this road, because of the enormous benefits of allowing divisional autonomy. It would be very difficult to make division managers accountable for their profits if they were not given a free hand in making important decisions.
3. To ensure that the information provided: (e.g., division Profit & Loss Accounts) is useful for evaluating the economic performance of divisions and the managerial performance of division managers.
Accounting helps the management in the following ways:
(1)Planning: Proper planning is very much needed for successful completion of various management activities. These planning – cash planning, sales planning, procurement planning, determining quantity of stock, development of planning, fixing up target – profit et are very much dependent on accounting data and information.
(2)Organization: Accounting plays a very vital role in proper execution of the important function of management-organization. Accounting helps management-organization by providing information like percentage of profit over capital, capital investment position, management efficie3ncy in controlling etc.
(3)Motivation: Labor-employees are to be motivated for achieving expected performance. Financial help is one of the main motivating factors of work. The management is to be aware of financial position of the business for providing financial benefits. Accounting helps the management by providing necessary information for taking proper decision.
(4)Co-ordination: One of the main function of the management is to achieve the final target of the business by coordinating various activities of different departments. Accounting helps in coordinating various activities of different department of the business.
(5)Control: The main function of the modern management are planning and controlling. Controlling is essential for completion of activities according to plan. Accounting can help management much in controlling.
(6)Preparation of final accounts: The management’s responsibility is to communicate operating results for a certain period and financial position of a business concern to the owners and parties concerned.
(7)Media of communication: Accounting plays a vital role as a media in communicating various information of different departments, business and management plan of action to various departments.
(8)Budgeting: Preparation of various budgets is essential to run the business successfully. The historical information which is needed in preparation of budget is supplied by accounting.
(9)Professional advice: An efficient and honest accountant helps the management with valuable professional advice for the development of its business. In the modern age with the complexities of business management has also become complex. In this aspect the role of accounting is very important. Accounting is an essential tool of management.
Accountability accounting involves accounting and budgeting an internal company. The aim is to plan and control the responsibility of a company to visit centers such as departments and decentralized divisions.
Accounting is the preparation of the annual and monthly budgets for each account center. The reported reports represent the actual amounts for each budget item and the difference between the budget and the actual quantities. In the sense that the actual transactions of the company are classified by a responsible center, which creates a monthly report.
The liability account allows the company to have a manager's responsibility center to maintain the manager's performance in the monthly comments.
Responsibility Centre
Responsibility The responsibility for the authority of the authorities is the responsibility of the authorities. The detailed graphic of the company is a logical resource for the use of technology. The most common centers of responsibility are your departments within a company. If the CEO of a company can make a decision. When a manager can control costs and revenue, the center is known as a profit center. It is the responsibility of the authorities to determine the cost of the goods and the cost of the goods. Management and cost managers are responsible for the overlay. Production cost centers and the production department. Other services, IT department, accounting and so on. Concentration centers have no boundaries for departments. There could be several cost centers in an apartment. For example, each assembly line could be a cost center. Also a special machine could be a cost center. Here you can go to the center of the city. The center of the city is in the center of the city. The centers of income of competent centers where they are. Salaries, commissions and production costs have worked. Performance centers exceed total costs. As a result, the Benefits Center Administrator is responsible for the Center's revenue, costs and benefits. A profit center is a center of responsibility and the investment center. It is the capital of the inverse. In fact, it is not the case that there is a default risk. The development of the value of an investment cen- tre takes place in the form of assets and capital. Transfer Pricing
The amount charged when one division sells goods or services to another division is called transfer price.
The basic purpose of transfer pricing is to induce optimal decision making in a decentralized organization (i.e., in most cases, to maximize the profit of the organization as a whole).
Purposes of Transfer Pricing
There are two main reasons for instituting a transfer pricing scheme:
• Generate separate profit figures for each division and thereby evaluate the performance of each division separately.
• Help coordinate production, sales and pricing decisions of the different divisions (via an appropriate choice of transfer prices). Transfer prices make managers aware of the value that goods and services have for other segments of the firm.
• Transfer pricing allows the company to generate profit (or cost) figures for each division separately.
• The transfer price will affect not only the reported profit of each center, but will also affect the allocation of an organization’s resources.
Main objectives of a transfer pricing system
1. To achieve goal congruence: The transfer prices should be such that actions which will have the effect of increasing a division’s reported profit will also have the effect of increasing the company’s reported profit. This maximises the likelihood that the division managers will act in the company’s best interests.
2. To ensure that divisional autonomy is maintained: In principle the top management of a company could simply issue precise instructions to divisions as to what goods to transfer to each other, in what quantities, and at what prices. This would seem to solve the problem of transfer pricing at a stroke, and to achieve optimization (for the company as a whole) by diktat. However, most organizations are unwilling to go down this road, because of the enormous benefits of allowing divisional autonomy. It would be very difficult to make division managers accountable for their profits if they were not given a free hand in making important decisions.
3. To ensure that the information provided: (e.g., division Profit & Loss Accounts) is useful for evaluating the economic performance of divisions and the managerial performance of division managers.
Accounting as an aid to management
The main object of Accounting is to record financial transaction systematically in the books of accounts and to find out profit-loss and financial position of a business. Ascertainment of profit-loss and financial position, interpretation and analysis of accounts and statements, development of accounting system, collection of statistical and economic data, formulation of financial principles and financial planning and controlling result as per plan etc. are the main function of accounting. In the modern age accounting is directly related with financial management. The function of management are planning, organizing, collecting business elements, motivating, coordinating and budgeting etc.Accounting helps the management in the following ways:
(1)Planning: Proper planning is very much needed for successful completion of various management activities. These planning – cash planning, sales planning, procurement planning, determining quantity of stock, development of planning, fixing up target – profit et are very much dependent on accounting data and information.
(2)Organization: Accounting plays a very vital role in proper execution of the important function of management-organization. Accounting helps management-organization by providing information like percentage of profit over capital, capital investment position, management efficie3ncy in controlling etc.
(3)Motivation: Labor-employees are to be motivated for achieving expected performance. Financial help is one of the main motivating factors of work. The management is to be aware of financial position of the business for providing financial benefits. Accounting helps the management by providing necessary information for taking proper decision.
(4)Co-ordination: One of the main function of the management is to achieve the final target of the business by coordinating various activities of different departments. Accounting helps in coordinating various activities of different department of the business.
(5)Control: The main function of the modern management are planning and controlling. Controlling is essential for completion of activities according to plan. Accounting can help management much in controlling.
(6)Preparation of final accounts: The management’s responsibility is to communicate operating results for a certain period and financial position of a business concern to the owners and parties concerned.
(7)Media of communication: Accounting plays a vital role as a media in communicating various information of different departments, business and management plan of action to various departments.
(8)Budgeting: Preparation of various budgets is essential to run the business successfully. The historical information which is needed in preparation of budget is supplied by accounting.
(9)Professional advice: An efficient and honest accountant helps the management with valuable professional advice for the development of its business. In the modern age with the complexities of business management has also become complex. In this aspect the role of accounting is very important. Accounting is an essential tool of management.
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