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when preparing responsibility reports an account should remember that utility of information tends to decrease with...

when preparing responsibility reports an account should remember that utility of information tends to decrease with the length of time required

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Answer #1

The statement is “true”.

Explanation: Responsibility reports falls under the domain of responsibility accounting and are used to report to different levels of management. For instance in case of a responsibility report to a department manager of a retail store or outlet the report will have information like actual amount of revenues and budgeted amount of revenue.

Responsibility reports lead to management by exception and hence they have to be timely. The accountants are required to prepare the reports in a timely manner and ideally soon after the end of the performance measurement period. If this is not done then the management will find little use for the responsibility report. Thus it is true that utility of information tends to decrease with the length of time required.

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