Answer (B) is correct . The basic purpose of a responsibility accounting system is to motivate management to perform in a manner consistent with overall company objectives. The assignment of responsibility implies that some revenues and costs can be changed through effective management. The system should have certain controls that provide for feedback reports indicating deviations from expectations. Higher-level management may focus on those deviations for either reinforcement or correction.
Answer (A) is incorrect because Budgeting is an element of a responsibility accounting system, not the basic purpose.
Answer (C) is incorrect because Authority is an element of a responsibility accounting system, not the basic purpose.
Answer (D) is incorrect because Analysis of variances is an element of a responsibility accounting system, not the basic purpose.
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