Definition: is the process of collecting, reporting, and analyzing financial and operational information about the activities of a company that it considers to be significant, and is performed by the individuals and departments that are in charge of said activities. Activity accounting is oftentimes used in decentralized companies and allows individuals or departments that are responsible for business activities to be rewarded or blamed for good and poor decisions included in a specific accounting statement.
In a Sentence:
According to our activity accounting reports, Jefferson was right when he decided to cut the amount of warehouse staff in half, as we didn’t suffer any losses in productivity.
The CEO made sure that the individuals tasked with activity accounting were unbiased in deciding which departments performed their duties on the required level of quality and which were lacking.
Ever since the management of Lasagna Fest introduced activity accounting, the company’s employees started performing their duties more carefully, afraid of having to pay for their mistakes.
Synonyms and related words: activity account, operating activities, activity-based costing, cost accounting