Passage below require critical analysis and breakdown

Summary:

Responsibility accounting is a system which makes everyone conscious and responsible for the job that is entrusted to someone by his/her supervisor, i.e., a control by delegating and locating responsibility for cost (Karmakar, n.d.i.)

This system defines the specific responsibility of the departmental supervisor as well as functional managers for jobs to be performed. Practically, it is the management who is responsible for the plan and control of the activities relating to the responsibility center. It follows the basic principle like any other control system, e.g., Budget or Standard Costing. The only difference is that the fixation of responsibility lies in the hands of individuals or departments

Advantages of Responsibility Accounting:

It introduces sound system of control.

It ensures budgeting to compare the result of an operation between the budgeted figures and the actual ones.

It helps the management to make an effective delegation of authority and required responsibility as well.

It will help also to increase the interest of the managerial executives since they are asked to explain the reasons of derivation of actual from the budgeted figures.

Structure of reports may be simplified (Karmakar).

Reaction:

The implementation and maintenance of responsibility accounting system is based upon information relating to inputs and outputs. The physical resources such as quantity of raw material used, and labor hours consumed are termed as inputs. These inputs expressed in the monetary terms are known as costs. Similarly, outputs expressed in monetary terms are called revenues. Thus, responsibility accounting is based on cost and revenue information.

Effective responsibility accounting requires both planned and actual financial information. It is not only the historical cost and revenue data but also the planned future data which is essential for the implementation of responsibility accounting system. It is through budgets that responsibility for implementing the plans is communicated to each level of management. The use of fixed budgets, flexible budgets and profit planning are all incorporated into one overall system of responsibility accounting.

In a small firm, one individual or a small group of individuals, who are usually the owners may possibly manage or control the entire organization.