Organizational chart

Definition

An organizational chart is a visual representation of the hierarchy within an organization. It outlines roles, responsibilities, and relationships between individuals and departments.

5 Must Know Facts For Your Next Test

1. Helps clarify the chain of command and reporting structure.
2. Essential for understanding departmental functions and managerial accounting roles.
3. Facilitates decision-making processes in both centralized and decentralized environments.
4. Aids in identifying areas of responsibility for performance evaluation in responsibility accounting.
5. Can highlight gaps or redundancies in organizational structure, impacting efficiency and accountability.

Review Questions

• What are the main purposes of an organizational chart in a managerial context?
• How does an organizational chart assist in decision-making within decentralized environments?
• Why is understanding the organizational chart important for responsibility accounting?

Related terms

Responsibility Accounting:

A system that measures the results of each responsibility center and compares them with expected outcomes.

Decentralization:

The distribution of decision-making authority throughout various levels in an organization.

Chain of Command: The formal line of authority through which orders are passed down within an organization.