Question

Which of the following is not applicable to responsibility accounting?

(a) Investment centre

(b) Accounting centre

(c) Profit centre

(d) Cost centre

Answer 1

Accounting centre is not a part of responsibility accounting. Responsibility accounting basically refers to a system in which different divisions of the organisation are established as responsibility centres. Herein, each department is given a set target and the head of the department (manager) is made responsible for achieving it. They are of different types of responsibility centres such as cost centre, investment centre, profit centre and revenue centre.