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Responsibility Accounting

Responsibility accounting is the accounting of budgeting. If someone is doing responsibility accounting, it means that they are on a job of deciding, managing, and making provisions of the income, expenses, and savings for a certain period of time for a company or organization.

In broader terms, we can say that responsibility accounting is not only used in small organizations, corporations, and non-corporations but also used in in-home businesses.


To understand responsibility accounting in a simpler way, here is a real-world example. You are accounting and organizing how much money your friend will earn and how much they will spend on electricity, food, rent, traveling and entertainment, etc. and how much will save for a certain period of time. In this scenario, you are doing responsibility accounting.

The person doing responsibility accounting is called the responsibility accounting manager. Good organization and implementation skills are required for this job.

Advantages of responsibility accounting include it can help a company’s chances of maximizing profits and minimizing losses.

But if the manager doesn’t do the work properly or something goes wrong, the company may suffer a huge loss and in extreme cases, can even shut down.

Written by Rishita Arora

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