Which of the following statements regarding responsibility accounting is not correct?
A) It calls for the preparation of reports containing detailed information regarding the performance of a responsibility center.
B) It is most effective in a decentralized business structure where many managers exert control over various segments of a company's operations.
C) It calls for the preparation of responsibility reports listing the budgeted and actual revenue and/or expense items over which the manager has control.
D) It requires top management to prepare a budget for the entire company and communicate that plan to lower levels of management.

Question

Quizplus · Accepted Answer

This statement is not correct because responsibility accounting does not require top management to prepare a budget for the entire company and communicate that plan to lower levels of management. Instead, it focuses on preparing reports and budgets for each responsibility center, allowing managers to have control over their specific areas of responsibility.

Which of the Following Statements Regarding Responsibility Accounting Is Not