The correct answer is: B. fixing organisational responsibilities for profit planning and controlling.
Responsibility accounting is a system that assigns responsibility for planning and controlling activities to specific individuals or groups within an organization. This helps to ensure that everyone is aware of their role in achieving the organization’s goals and objectives.
A system of collective responsibility does not provide the same level of accountability as a system of individual responsibility. This is because it is difficult to determine who is responsible for specific outcomes when there is no clear line of authority.
Devising standards of work performance is an important part of responsibility accounting, but it is not the only factor that determines success. Without a clear system of responsibility, it is difficult to ensure that standards are met.
Controlling cost and performance is also important, but it is not the primary goal of responsibility accounting. The goal of responsibility accounting is to establish a system of accountability that will help the organization achieve its goals.
Here is a more detailed explanation of each option:
- A. establishing a system of collective responsibility. This option is incorrect because it does not provide the same level of accountability as a system of individual responsibility. It is difficult to determine who is responsible for specific outcomes when there is no clear line of authority.
- B. fixing organisational responsibilities for profit planning and controlling. This option is correct because it establishes a system of accountability that will help the organization achieve its goals.
- C. devising standards of work performance. This option is important, but it is not the only factor that determines success. Without a clear system of responsibility, it is difficult to ensure that standards are met.
- D. controlling cost and performance. This option is also important, but it is not the primary goal of responsibility accounting. The goal of responsibility accounting is to establish a system of accountability that will help the organization achieve its goals.