Strategic Plan for Apple Inc.

Executive Summary

Apple Inc. is a leader in the electronics industry which is linked to its ability to mitigate the increasing competition through the production of innovative products. Across all industries, the company occupies the 15th position concerning the most significant global companies because of its superior performance and dominance. Over the recent years due to technology development competition has intensified in the electronic industry forcing companies to review their strategic plans. However, through the investment in research and innovation, Apple has been able to position itself as the market leader regarding innovation strategically. Maintaining this position requires that the company review its strategic plan. This paper will analyze Apple Inc. strategic plan based on its internal and external environment and offer strategic proposals. The reports recommend that the company need to expand its market presence and produce products for all consumers rather than focusing on upper-class consumers. Also, continuous investment in research and innovation is a necessary tool for competition.

Company Overview

Apple Inc. is a global corporation, based in the United States which was established in the year 1976 (Richard & Terrell, 2008). The company is involved in the designating, production and sells of electronics ranging from computers, mobile phones, laptops and so on. The company is also involved in the production of software products, particularly programs. The company is widely recognized for its innovative products and the ability to differentiate all its products from those of the competitors in the market. As per the year 2012, the company noted that it had more than three hundred operative stores in over sixteen nations with the addition of online shops (Katherine et al., 2012). Apple Inc. is described as one of the largest technology corporation in the globe about the general companies trading across the globe, its resources, profitability, sales, market share and global presence. Based on the fact that the company only produces innovative and differentiated products it offers premium pricing which has been the primary driver of its increasing revenue. Some analysts have in the past noted that the corporation is more productive than the American government (Katherine et al., 2012). The company holds more than sixty thousand staffs across the world which shows its importance in the globalized market.

Despite the success that the company has obtained over the years, it has in several occasions acquired extreme criticism about the manner in which it treats its suppliers and negative contribution to the environment. Most have accounted that the company is not socially responsible for such acts. For instance, the company was criticized for its establishment in China where despite its success its workers live in unhealthy states in addition to being subjected to minimum wages. However, the company has set high operation standards that demands its general compliance for the achievement of these objectives (Bach, 2007). Over the past decade competition in the electronic market has intensified which has led to the intensification of competition and thus pricing has become the competitor's focus. More and more firms have begun to focus on cost leadership besides innovative differentiation a strategy that is effective in retaining and attracting a new set of consumers. Through the use of research and innovation Apple Inc. has enhanced its ability to position products in the market as the best in quality, innovation, and dependability when equated to similar goods in the industry. Despite this success, the company needs to consistently evaluate its strategy to retain its position in the long term globally.

Company History

Apple Inc. was established in the year 1976 by both Steve Jobs alongside Steve Wozniak. The founders developed the vision that sought to transform the manner in which individual’s perceived computers (Richard & Terrell, 2008). The intention was to create small-sized computers to increase personal ownership at home and within the commercial sector. In other words, the main agenda was to create computers that were easy to use based on the needs of the consumers. The partnership began its operation with the creation of Apple I which were presented in the market even with the absence of working monitors which were later included in 1977 (Richard & Terrell, 2008). It is the second set of the production that transformed the computer sector with the initiation of the first colored graphics. Their sales increased rather rapidly, and by 1980 the company was widely recognized by the public. However, Wozniak decided to quit due to his loss of interest in the continuous development of computers and it is then that Sculley John was employed as the company’s leader (Richard & Terrell, 2008). The partnership never lasted long since after two years of operation a controversy emerged forcing Jobs to leave the company and opened his software firm which later emerged as the most significant and successful company concerning the development of computer animation. The company never failed about performance, and it achieved its most crucial sale record in 1990 (Richard & Terrell, 2008). The achievement was however connected to the strategic plan that Job had set mostly with regard to the corporation with small firms such as Adobe which assisted in the development of Desktop Publishing.

The success of Apple attracted large corporations such as Microsoft by Sculley rejected their offers (Richard & Terrell, 2008). Later such decisions become a nightmare because the operating systems of the company turned out to be the most significant competition. The company’s market share reduced notably and most individuals thought the situation would lead to a closure. In 1997 the company was in need of an innovative operating system to produce more competitive products, and it resulted in buying Jobs firm. Jobs was needed because of his knowledge and expertise, and he was made the CEO, and he settled on coming up with significant transformations in the company. He created a collaboration with Microsoft to create innovative software. His decision revolutionized the firm which led to the launching of personal computers and added Mp3 players like iPod (Richard & Terrell, 2008). The company currently operates in the production of iPhone series, TV, and software. Even with the absence of Steve Jobs, his legacy remains because the company only pushes for the achievement of limitless creativity in the innovative society.

Products and or services

Apple Inc. provides a range of electronic products and services like iPhone, Mac, Watch, iPod, TV, software, consumer portfolio, operating system and variety of fixtures, services, and offerings. Also, the company is also involved in selling and delivering innovative contents as well as applications via Apple store, iTunes, Application software and corporate online services that offers music and videos. The corporation is involved in selling its essential products via the retaining shops, internet stores as well as direct sales through other sellers. The aspect has been effective in increasing its sales in general since this tends to make its products easily accessible. The firm is also involved in the sales of Apple products compatibles such as software and fixtures mainly via the online and retailing shops. The firm has a wide range of consumers ranging from small sized, medium sellers, government, and businesses and learning institution. Personalized seller’s accounts for the highest consumer’s portion mainly regarding personal computers and smartphones (Katherine et al., 2012). IPhone represents the corporation’s smartphones branch that utilizes its own made operating system. Its products mainly computers are widely acknowledged as the best in innovation and performance.

The company’s TV products are very developed, and they assist the consumers in accessing digital information directly that supports online streaming of high-quality music and video. The products operate on a self-made operating system that is compatible with all its Apple products. In other words, the company offers personalized electronic products that are technology focused and are developed with the highest sense of innovation. Through such products, the consumers can connect in different ways. Also, all its application software are consumer-focused mainly aiming those with the intention of meeting the digitalized lifestyle such as iLife. With iPad, the company permits its consumers to make contactless payments for all the acquired items (Katherine et al., 2012). With the ability to take credit and debit cards the company has boosted convenience and loyalty from its consumers across the globe. Also, such payment is favorable for the online sales where there is no physical association. The development has also reduced losses since the company can account for all its products sales in general and profitability a strategy that is vital for sustainability.

Operations

Apple Inc. operates within the global electronics industry. The company remains to be the largest firm in the technology sector. The company has been able to maintain such states through adhering to high operating standards. The consumers, employees, suppliers, and investors are considered to be the most expensive asset that must be retained at all cost for competitive advantage. Even though the company seeks to maximize it is earning at all times it acknowledges the need to operate while being socially responsible. The firm endeavors in staff’s empowerment. Based on the fact that it operates in a rapidly changing surrounding and not all of its workers have the ability to education access the firm has introduced training programs to keep the updated (Katherine et al., 2012). Such moves encourage the employees to generally explore all the existing opportunities which promote internal hiring more as the means of retaining the most qualified staffs.

The company operates on the global scale, and its treatment of suppliers and employees is fair. In that, the company profoundly acknowledges the rights of the staffs and thus even though it seeks to operate under minimal expenses it evades issues related to underpayments. Health and safety are also considered since the corporation mainly ensures that the working condition is safe and standardized. In such the workers are highly motivated to be part of the company and follow the set objectives. The company is socially responsible in all its operations. It ensures that the suppliers account for the environmental effects of emissions. The firm is collaborative with all the stakeholders in the reduction of carbon footprint. This is achieved through the regular replacement of inactive systems to ensure energy efficiency. Besides, the company also focuses on the use of renewable energy. The firm has set highest accountability standards that it assists the suppliers in meeting the set levels.

Vision

The company believes that it is on the ground where it is required to produce quality products through innovation. The company seeks to achieve simplicity in general by possessing and controlling the existing technology in all the products. The objective of the company is not to settle for low-quality products while making productive collaborations for the wellness of the industry (Dodobskiy, 2018).

Mission Statement

            The company’s mission statement notes the increasing necessity to integrate safety and health management practices while adhering to the need to offer innovative and high-quality products. The company strives to become the leader in the digital revolution through its physical and online servicing (Dodobskiy, 2018). The company has reinvented mobile products through its revolutionized Apple and iPhone stores.

Corporate Values & Culture

            Apple Inc. tries to embrace diversity and inclusivity as the core of all the organizational culture. Some of its primary values include, excellence, customs, and principles which the company believes are likely to assist it as well as the workers in the achievement of success. Through its corporate culture, it combines several features for the achievement of these values. First, the company focuses on innovation and originality. The firm is one that is centered on the differentiation approach with regard to performance and products designs. Thus, such an approach is one that is highly dependent on creativity (Dodobskiy, 2018). The organization encourages all the involved workers to be highly productive. Inclusion also helps in supporting creativity since individuals hold varying levels of expertise. In all this, the company maintains secrecy which guards it against the competitors as they are unable to duplicate their approaches.

SWOT Analysis

Strengths

            Apple Inc. remains to be one of the most respected and influential electronic brand of all time across the globe. Through its favorite image, the company is able of launching new products consistently with minimal resistance from the market. Also, the company is also retaining its high pricing approach which creates high levels of profit. The strength is one that is held by very few firms given that most companies must lower their prices to attract new buyers. For Apple, this is a vital strength as it brings about flexibility with regard to the company’s ability to change its pricing while still guarding the acquired revenue (Hitt, Ireland & Hoskisson, 2015). Besides, Apple is very authoritative due to its focus on innovation which enables the products users to access digital content at ease. The ability to innovate rapidly has enabled the corporation to sustain the most recent technologies that guard its competitive abilities. With this regard it is particularly challenging to compete with the company has it has acquired a notable share in the market through its extensive global presence.

Weaknesses

            Apple is challenged by its somewhat limited distribution channels given that the company focuses on the principle of exclusion. In that, the company is involved in the selection of the best sellers for its products. Therefore its products are not sold by those that have not sought their permission which leads to inaccessibility in most parts of the globe (Hitt, Ireland & Hoskisson, 2015). This, therefore, illustrates that the distribution is not as useful since it generally lowers the authority of the corporation. Besides, due to the high pricing approach the company is limited to only gaining its revenue from upper-class markets. The market has lesser consumers while the rest are not able to afford the products due to their financial limitation which hinders the ability of the firm to dominate. It is rather evident that the main weaknesses of the company lie in its distribution and pricing approaches which creates hindrances for its expansion.

Opportunities

            Apple can expand more to different nations while increasing its distribution system to increase products availability. In that, the opportunity asserts on the necessity to alter the distribution approach. An extensive distribution approach is likely to assist the corporation in reaching more consumers (Hitt, Ireland & Hoskisson, 2015). Also, based on its resources it can also focus on exploring various products within the electronic segment. It can support this by focusing on innovation which will further sustain its position in the market. The company needs to be aggressive in dealing with the market.

Threats

            The firm’s aggression mainly influences extreme competition in the sector. The sector is dominated by some of the most established companies such as Samsung and Microsoft and they also focus on innovation (Hitt, Ireland & Hoskisson, 2015). Due to the strategic focus of the competitors the firm needs to develop authoritative approaches that guard it against the competition. Besides, the company is faced with the imitation threat since the other companies can copy its approaches and designs. Also due to the intense focus on innovation, the company might suffer from high operating expense thus affecting its profitability. The situation demands the development of strategic approaches that will secure its operations and focus as a whole.

Competition

Apple Inc. is involved in different levels of competition within the computer, mobile phone, and music in general. The company mainly depends on in innovative goods in the development of different operating goods that makes the company somewhat distinct from all its competitors. Due to its focus on excellence, this enables it to set high prices, unlike the competitors. The main competitors are Samsung, OPPO, Huawei, Microsoft and Google since they are involved in the development of similar and innovative goods (Apple-Knowledge, 2017). However, in the computer industry companies such as Dell are involved in the sales of more products while equated to Apple because of their low pricing approach.

Figure 1: Market Competition

Apple-Knowledge (2017)

Management team/Leadership

Following the exit of Steve Jobs in 2011 from the company Tim Cook became the CEO. He was the head of operation before (Richard & Terrell, 2008). The leadership has been successful since the company has retained its competitiveness over the years. However, Cook is in most cases criticized as one that lacks the same ambitions as Jobs. For instance, it is noted that the company has fallen to long lead time which slows its revenue since the company takes long to launch a product which creates more opportunities for others to dominate. At the moment it is noted that the company is facing leadership issues since the CEO sets financial goals that are too intense for the firm to achieve. In addition the company is led by more male and whites respectively which shows that inclusivity and diversity are not supported fully.

Financial Outlook

Apple reported a negative revenue for this year’s first operative quarter. The company sold lesser iPhones that it has been anticipated prior. However, the financial outlook of the corporation is positive since despite the reduction it has not experienced any form of losses. The company forecast a revenue of sixty billion up to sixty two million with a gross rate of between 38 and 39 percent (Aripaka & Nellis, 2018). The company gained 88 billion with a three percent increase. It is expected that the revenue will increase with about 8 percent both for the products and services that it provides. Within the next one operative year the company is expected to experience an increase with regard to all its sales (Aripaka & Nellis, 2018).

Figure 2: Apple’s Financial Forecast

CNN Money (2018)

Strategies

Apple Inc. mainly relies on differentiation business approach. In that the company seeks to differentiate itself from all the competitors by producing products with innovative designs and excellent performance (Hitt, Ireland & Hoskisson, 2015). The focus is to generate products that follows simplicity to enable the users to use them at ease. Through this the company is able to acquire flexibility on the ground that it competes fully on its own something that is very distinct. Unlike the competitors being different means that the company must produce products that are of the utmost quality in general. Thus, the company is fully able to compete strategically. The differentiation approach also applies when it comes to pricing and distribution. The company sets rather high prices due to the fact that the products are digitally developed (Hitt, Ireland & Hoskisson, 2015). The products are only distributed by the individuals or retailers with license. The products are intended to reach the upper class individuals based on the high pricing.

Conclusion

In summing up, it is evident from the analysis above that Apple Inc. is the innovative leader in the electronics industry. The company is one that follows the differentiation approach as it seeks to offer excellent and unique designs in everything that they produce. The company has achieved its success due to having a focused and skilled leadership that encourages creativity. The firm has the opportunities of expanding its market and distribution channels to gain access to more consumers. Even with the success that the company has obtained there is a need to reevaluate its strategies to sustain its position. The pricing and distribution approaches needs to be revisited since the market is rapidly changing. The lead time also should be reduced. In general it is evident that the company has the ability to succeed in the long run over its competitors through differentiation.

References

Apple Knowledge. (2017). Full Analysis of Apple Inc. Competitors. Retrieved from: http://appleknowledge.xyz/apple-competitors.html

Aripaka, P. & Nellis, S. (2018). Strong iPhone prices, cash plans buoy Apple shares after muted outlook. Retrieved from: https://www.reuters.com/article/us-apple-results/apples-second-quarter-revenue-forecast-misses-estimates-idUSKBN1FL6J6

Bach, B. (2007). Implications of enabling technologies for Apple Inc: Cybermarketing & enabling technologies. München: GRIN Verlag GmbH.

Dodobskiy, J. (2018). Apple Organizational Culture – Secrecy and Maximum Benefit from Human Resources. Retrieved from: https://research-methodology.net/apple-organizational-culture/

Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2015). Strategic management: Competitiveness & globalization; concepts. Stamford, Conn: Cengage Learning.

Johnson, Katherine; Li, Yang; Phan, Hang; Singer, Jason; and Trinh, Hoang. (2012). "The Innovative Success that is Apple, Inc.”. Theses, Dissertations and Capstones. Paper 418. Pp. 1-48.

Khan, U. A., Alam, M. N., & Alam, S. (2015). A critical analysis of internal and external environment of Apple Inc. International Journal of Economics, Commerce and Management, 3(6), 955-961.

Richard, A. & Terrell, E. (2008). Apple Computer, Inc. Company History. Retrieved from: http://www.loc.gov/rr/business/businesshistory/April/apple.html

Appendices

Appendix 1: Financial Outlook

Retrieved From: http://money.cnn.com/quote/forecast/forecast.html?symb=aapl

Appendix 2: Marketing Management

Retrieved From: http://pm01g07.blogspot.com/2014/07/apple-inc-marketing-strategy-     pgdpm.html

Bartlet Financial Services Company

The accounting treatment for various securities that are held with the aim of trading normally have their current market values mentioned in a company’s balance sheet  by way of step of adjustments at the year-end.  Securities that a firm is intending to trade implies it holds them with an aim of having them sold once their value increases, which provides some profit over the short-term. This is in addition to the reported gains and losses of the initial market value and the current market value on the profit and loss account. Moreover, this is irrespective of whether such securities remains held or have been sold by the company (Costello et.al 2011). Therefore, the aforementioned accounting entry on the profit and loss account has some impacts for the profitability reporting at the end of the year. On the other hand , securities that have been held for the purpose of “available-for-sale “ are usually not include in the income statement report whatsoever. Investments in such securities are only included on the equity section of stockholders in the balance sheet in form of stockholders’ asset value.

The accounting process for “available for sales’ is quite the same as the “accounting-for-trading securities” (Costello et.al 2011). The difference in this case relates to the recognition of the various changes in the securities’ value. The opposite account to gain or loss that has not been realized in other income is the short-run fair-market adjustment in the “available for sales”. There will be no impact on the accounting statement.  In case of securities “held-to-maturity” by a firm, they are normally recorded at cost (in this case any fees plus purchase price) and resulting gains or losses should only be recognized after the securities have been sold off. The investment in such securities is normally held by the investor until a specific indefinite time elapses. The changes in the stated amount should not be combined in net income. Rather it should be listed together with other comprehensive income that has been accumulated. The reporting of both comprehensive and net income is made with an aim of allowing decision makers to have a better understanding of the effect of the unrealized losses or gains.

The accounting standards are basically regulated by the Sarbanes-Oxley Act, SEC and also COSO, through which the corporation reporting of security investments and debt are reported. Even though complex consideration such as reliability, relevance, consistency and matching that usually impacts on the actual accounting scenarios, the fundamental decisions in accounting process are regulated by the existing laws (Kermis & Kermis, 2014). However, intent is the basic accounting standard for investment in debt and security. The accounting for equity securities and debt securities requires that they be categorized by management based on the intent for holding them (Svanberg, 2012).  On that note, for McCabe or Faust to follow ethical standards of accounting, they should categorize the investments legitimately and in accordance to the real intent for having any investment in security or debt.  Faust and McCabe want to categorize such investment on the basis of increased values or decreased values and on their possible impact on the income, both currently and in future. Their method can be viewed as unethical at the surface, where the intent of having the investment held is ignored, which does not follow the accounting standards that call for investments to be categorized as Trading or “Available-for-sale” based on the basis of holding intent. Moreover, categorization on the basis of income projections for different years may have an impact for investors who may gain or lose the value of the asset on the basis of the categorization decisions (Svanberg, 2012).  The two individuals fail in the self-conception and ethical intent combination, so that they do not include truthfulness and even objective as professionals in their efforts to categorize the investments.

 If the present value of aforesaid securities decreases by the following reporting period, such investments have to be recorded to indicate that there is a change in security’s fair market value (Kermis & Kermis, 2014). The changes are shown as arise in other broad income. These securities do not have to be sold out for the recognition of value change to be noted. This is why the resulting gains or losses are viewed as being unrealized until the selling of the securities.  If all securities that have been reduced in value are classified as held-to-maturity, the amortized value should be used in the measurement and further reduction in fair value above the initial value (Kermis & Kermis, 2014). Any additional reduction in fair value should be categorized as part of earnings’ impairment losses.  Faust approach or suggestion would have involved the classification of such debt securities whose value has declined as trading securities and those whose value has improved as “held-to-maturity (Svanberg, 2012).  Consequently, such an approach would have the right impact of reducing earnings as a result of reduction in the fair value of the debt investment.

Stakeholders comprises of  a group that is bigger and more comprehensive than just  stockholders .Such individuals include individuals or sub-groups that may either have an  impact or be affect by various financial management decisions made by the company (Drover, Franczak & Beltramini,2012). In every scenario in the aforesaid cases, the approach proposed is unethical because it does not really align with the GAAP. The financial reports would not be stated fairly or rather, would be fraudulent. The people who would be affected in such a case include almost all the stakeholders such as stockholders, the government, unions and the Board of Directors.

 At the surface, the classification of security investment and debt with an aim of optimizing end of year incomes that have been selectively set can have similar ethical issues as have been discussed before. The fundamental and basic accounting standards as provided by Committee on Sponsoring Organizations SEC and Sarbanes-Oxley Act and SEC would not be met. They provide that the categorization of security investments and debt investment should be done on the basis of investment holding intent (Rockness & Rockness, 2010). Any other classification on the basis of other income that has illogically been chosen breaches the basic primary basic requirement of the accounting standard. Selling of held-to-maturity securities that have not yet matured can be considered unethical. The GAAP provides for the sale of some chosen securities as long as the inventory approach in the assignment of cost adopted by a firm is applied constantly.  On the other hand, engaging in illogical and poor accounting practices and unreasonable business decision where assets are wasted or where financial reports are misstated tantamount to unethical behavior (Rockness & Rockness, 2010).

References

Kermis, G. F., & Kermis, M. D. (2014). Financial reporting regulations, ethics and accounting education. Journal of Academic and Business Ethics, 8, 1.

Costello, A. M., & WITTENBERG‐MOERMAN*, R. E. G. I. N. A. (2011). The impact of financial reporting quality on debt contracting: Evidence from internal control weakness reports. Journal of Accounting Research, 49(1), 97-136.

Drover, W., Franczak, J., & Beltramini, R. F. (2012). A 30-Year Historical Examination of Ethical Concerns Regarding Business Ethics: Who’s Concerned?. Journal of business ethics, 111(4), 431-438.

Svanberg, J. (2012). Professional Accountants' Ethical Intent-The Impact of Job Role Beliefs And Professional Identity. EJBO: Electronic Journal of Business Ethics and Organizational Studies.

Rockness, H. O., & Rockness, J. W. (2010). Navigating the complex maze of ethics CPE. Accounting and the Public Interest, 10(1), 88-104.

Critical Review: Strategic Management Accounting

Introduction

The article, ‘Strategic management accounting: the emperor 9 s new clothes’ authored by Beverly R. Lord focused on reviewing the contribution that strategic management accounting  have on the strategy development and the enhancement of the competitive synergy (Lord, 1996). Lord (1996) noted that although there is little evidence on the strategic management accounting use, it is evident through evaluation of already existing companies.  In addition, the techniques and elements within the firm are not formed by the management accountants but rather, it is the role of operation management. The latter will place the accounting management in a strategic position by using strategies such as cost leadership.

Summary

After defining strategic management accounting, the author focused on its components and the scope. It is important to note that the author advocates for extension of the scope of the traditional management accounting to consideration of the external factors of the firm. First, the strategic management account involves the collection of the competitor’s details such a cost, production volume and the pricing models. Second, there is continuous effort to manage costs as well as the adoption of management accounting methods dependent on the strategic position adopted. Further, the author revealed the contemporary application of the strategic management accounting in Cyclemakers. It is revealed that Cyclemakers despite slight changes in the accounting system, Cyclemakers obtained competitors details through salespersons and reduced costs through linkage of cost drivers with the competitive advantage factors (Lord, 1996). Note that the operation management play role in strategy planning and the top management, stake holders as well as interest group creates a network of interaction. Thus, the management accounting alone cannot form a strategic plan but its main role is to provide control system and also acts as a language of discourse.

Methodology

 The author argues that the techniques for managing accounting   are part of business management strategies and this means that the firm’s operation management is responsible in providing the technique.  In other words, the strategic elements in the management accounting system are rooted from the firm (Lord, 1996).  In explaining this statement, the author uses Cyclemakers Group Ltd, a business that was competing with dominant manufactures.  However, the government regulations restricted the business from importing products. Later, the government removed the restrictions and this changed the competitive nature since many companies could enter in the market with full force. From the case study, the author concludes that since Cyclemakers is a small business, accountants may not implement efficient decision on how to run the business but the operational management that has knowledge and experience is responsible in strategy formation (Lord, 1996).

Critique

Lord (1996) noted the need to consider the competitor's information rather than focusing on the value of the internal information only. This is a great strength of the article considering the fact that competition has intensified due to the globalization, increased liberalization and the presence of the internet (Borcuch, Piłat-Borcuch & Świerczyńska-Kaczor, 2014). With the increased competition, the firm’s strategic point cannot ignore the activities of the competitors that are indirectly part of the company. Lord (1996) noted that it is vital to go ahead and compare the competitor’s details with that of the concerned company. For instance, the budgets of the company can be prepared with more columns to incorporate the activities of the competitors A and B. Further, the sharing of the collected information should not only be restricted to the management only, but others employees also need the information collected to facilitate decisions at their strategic units of operations. That way, the management decisions are complimented by the employees at the lower levels (Foudraine, 2015). Through adoption of such approach, the company is able to succeed irrespective of strategic approach undertaken, differentiation, or cost leadership.

Nevertheless, the information has not been presented without several evident weaknesses. The first weakness regards repetition. While abstract provides a good summary of the paper, the same summary is presented on page 348 to explain the purpose of the paper. After a detailed discussion of the components of the strategic management accounting, the same is repeated in summary on page 354. I feel a well-written abstract should be enough rather than the witnessed repetition that hinders full conceptualization of the ideas learned. Notably, the author assumes that it will be easy to obtain vital details about competitors from published reports and salespersons. However, it is important to note that some crucial internal information about the company may still be unavailable (Berry & Jarvis, 2006). Therefore, information about competitors should only be used to support strategic planning and relied on precaution.

Conclusion

It is vital to consider the information about the competitors especially with the onset of the globalization, liberation and the use of the internet. Nevertheless, it is significant to note that it is difficult to obtain competitors internal information.  The operation management should place the management accounting in a strategic position by implementing strategies in the business operations. The information obtained should be supportive to strategic planning and should be diligently relied on with precaution. Regarding formatting, the author should avoid repetition.

References

Berry, A., & Jarvis, R. (2006). Accounting in a business context. London: Thomson Learning.

Borcuch, A., Piłat-Borcuch, M., & Świerczyńska-Kaczor, U. (2014). The Influence of the Internet on globalization process. Journal of Economics and Business Research, 18(1), 118-129.

Foudraine, J. P. (2015). Practices to involve employees in the strategy process (Bachelor's thesis, University of Twente).

Lord, B. R. (1996). Strategic management accounting: the emperor's new clothes?. Management Accounting Research, 7(3), 347-366.

Does the claim hold water

Globalization across the world has brought about so many positive impacts in our economy. However, with the rate at which globalization is taking place, businesses are involved in dealing with tough problems in their day to day operations. There has been an effort that has been put in place so as to curb these problems facing all businesses across the world that includes changing some of the accounting rules. Accounting has played quite an essential role in boosting the profits of the businesses and also the economy of the various countries. This paper will therefore seek to support the claim that accountants are the solution to solving the numerous problems facing the businesses’ money making process.

Accountability in businesses is one of the most important elements towards success. Having a corporate reporting which is the role of accountants ensure that a company’s way of making money is clear. As a result of accountability aspect in businesses, businesses are able to analyze their sustainability as evidenced in the annual report provided by the accountants (Bakker, 2013). With accounting, investors as well as business people are able to focus on both the internal and also o the external factors affecting the business. Reports on internal sustainability are geared towards improving the management of risk and performance of a business. on the other hand, the external disclosure by the annual reports submitted by accountants act as a driver for a more efficient valuation of organizations and assists in acquiring an effective allocation of the capital investments in the market (Bakker, 2013). Major corporations and companies are active players in derivative markets as a means of increasing their profits and it is for this reason that attracted the attention of the business reporting. Some of the companies and corporations regard some of the risks as substantial and thus they fail to disclosure their financial reports to the public and are thus treated as off-balance sheet transactions. This is not the right direction used by these organizations s it does not support transparency and accountability hence it may make it difficult for investors and the public to effectively evaluate the real risks on the ground. The truth about the performance of a business should not at any given time be made aware to people whenever losses are reported as this is detrimental in the success of any business or organization. It is for this reason that the business should integrate the use of accounting approach where accounting reports are frequently presented to the stakeholders and the business hence allowing them to evaluate their current stand in sustainability and in handling risks and ultimately assessing the overall performance of the business (Korten, 2001).

To sum it up, for the world to effectively address the many challenges in businesses, the businesses must engage in business transactions that are transparent and accountable. Businesses must also acknowledge that the exploitation, conservation and the social benefits that they stimulate must be considered into a company’s value and also in the daily management. This is thus a radical change that all businesses should endeavor to be a part of as this will see the businesses move into a new level of success. This radical transformation phase will only be enhanced by accountants who are making big steps into changing the transparency and accountability of companies through submission of annual reports that are all inclusive.

References

Korten, D. C. (2001). When Corporations Rule the World. Bloomfield, CT: Kumarian Press, Inc.

Pop quiz #1 paragraph

The choice on construction of the Wall should be done within a rational choice framework, which assumes that amidst various discrete options for dealing with immigrants from Mexican border, the option with maximum benefits should be chosen.  The fitting of choice model to the set of information available relating to various options for dealing with the problem, the construction of the wall will not be viable if other options for controlling immigrants have better utility than the wall itself. This means that the benefits obtained from the wall cannot justify the cost incurred in the construction.  The Expected Utility of the wall includes the curbing of immigrants from the Mexico or that the building of the wall would lead to increased number of unrecorded immigrants into US.  The building of the Wall will not hinder the movement of immigrants though it may reduce their number. The wall may either reduce the number documented of immigrants or increase the number of undocumented immigrants.

The accounting cost of the wall can be expected to range between $15 and $ 25 billion, in addition to an annual maintenance of $ 700 million. This also equals the transaction cost that could be incurred by both governments (Smith, 2015).  The cost can be expected to increase, and with time the marginal cost can be expected to increase. The social costs relating to this policy includes the possibility of having more undocumented immigrants, since the wall may never prevent them from crossing over. The various questions that arise from the construction of the wall include: will the wall really prevent immigrants from crossing the border? Can the benefits gain from the wall justify the cost incurred in its construction?

References

Smith, T. M., (2015).Trump’s Wall and the Cost-Benefit Analysis of Immigration. Retrieved from: https://www.huffingtonpost.com/the-conversation-us/trumps-wall-and-the-cost_b_8339144.html

Financial Accounting

LO 3

Reconciliation of banks statement involves verifying the amount indicated in the bank statement to ensure they are consistent with total amount in Cash account of a firm.  There is a benefit of doing reconciliation of the bank statement which include confirmation that the cash reported by a firm in its financial records is compatible with what is in the records of the bank.  The process involves adjusting the bank statement balance to the true balance and adjusting the balance as per the records so that the correct balance is obtained.  Both of the adjusted amounts have to be the same and if not, the process must be repeated until an identical balance is obtained.  Then, the preparation of journal entries follows so that balance as per records is adjusted (Lunt, H, 2009, 282).

LO 4

Control account is a record of various individual items or an impersonal account that forms part of double process. These accounts are majorly used for trade payables and trade receivables. A Receivable Control Account is where all records related total receivables are kept.   At any given time, the receivable control account’s balance is the overall amount due to the firm at that given moment from receivables.  A Payable Control Account is where records of transactions relating to the total payables and the account balance at a given time equal to the overall amount owed to creditors at this time. Control accounts are held for various reasons: they help in checking the accuracy of personal accounts entries in payables and receivables ledge (Bebbington, Gray & Laughlin, 2001, 121).

 A mistake can easily be made in posting entries since many entries are required to be made or transposition of figures can occur. The errors made can be identified by comparing receivables control account balance with each balance in receivables ledger’s personal accounts. The errors can also be identified through a comparison of payables control account balance with each balance in payables ledger personal accounts (Bebbington, Gray & Laughlin, 2001, 121). Secondly, control accounts help identifying errors in case of monthly, weekly daily posting to the accounts. If there is a failure to record a payment or invoice in relevant personal accounts or if a transposition error occurs, it would be a huge task to identify such errors at the yearend in case of many transactions. A control account enables the comparison with every balance in payables or receivables ledger for each month, week and day to locate the error more quickly (Bebbington, Gray & Laughlin, 2001,121). The process of reconciling control accounts involves finding the total balances. The steps includes: finding the Creditors Control Account balances; add deferred transactions balances;  finding overall balances of supplier accounts ; checking any direct posting of journals  to the nominal account; finding opening balances for the customer accounts ; checking ant posting of transactions in suspense account ; finding the Creditors Control account balance (Bebbington, Gray & Laughlin, 2001, 122).

 Suspense account enables the posting of transactions before enough information is obtained for creating an entry to the appropriate accounts.  If such transactions are not posted, some transactions may fail to be recorded which results to inaccurate financials at yearend.  Clearing of suspense accounts involves reviewing every transaction and shifting it to the relevant account immediately. The account is, therefore, temporary and any posting should be made when if an error has arisen. Clearing of the account ensures all entries are made before preparing final accounts (Bebbington, Gray & Laughlin, 2001, 120).

References

Lunt, H., & Chartered Institute of Management Accountants. (2009). C2: Fundamentals of financial accounting : CIMA Certificate in Business Accounting. Oxford: CIMA. 282-283

Bebbington, J., Gray, R., & Laughlin, R. (2001). Financial accounting: Practice and principles. London: Thomson Learning. 120-122

Accounting Concepts

My career plan is to become a financial analyst in any company or even a bank. The following are the accounting concepts which I will require, cost analysis, product costing, capital budgeting and operating budgets. These managerial concepts will help in being able to improve my professional skills as a financial analyst, in the sense that I will be able to carry out my work at ease, and in a professional way, due to the experience which I will have gained from these managerial accounting concepts.

Cost Analysis 

Cost benefit analysis will enable me to be able to have systematic approach in estimating the pros and cons of alternatives. In so doing, I will be able to clearly analyse the costs of different products, hence selecting a high quality product, which is also cheaper (Maher, Stickney & Weil, 2012). This will not only help me to improve my performance at work, but it will also allow me to be able to offer the best services to my clients, hence enjoying my job as a financial analyst. Furthermore, I will also be able to help small and medium enterprises with concepts which can allow them to be able to improve productivity, while at the same time reducing the losses incurred.

Product Costing    

This is a good concept, as it will enable me as an financial analyst, to create a cost effective costs which would be able to create a product. This concept is significant in my career, as it will also allow me to come up with necessary techniques of designing and budgeting for a product, at a very low budget, whereas the same product will be very attractive to the eyes of the consumers, hence leading to profitability (Maher, Stickney & Weil, 2012). This is a concept which is basically needed in most companies, as it allows companies to avoid encountering losses, and also reducing the cost of production, which may be recovered after a long period of time. In so doing, it will be easier for the companies to come up new products, without the fear of receiving little to no returns after a short period of time.    

Capital Budgeting

As a financial analyst, I will be required to have capital budgeting knowledge and techniques. This is consequently a significant concept in my career, as it will help me in determining if a company’s long term investment may require funding (Maher, Stickney & Weil, 2012). Similarly, the concept provides me with the techniques of understanding how to consider the effectiveness of a product, and how asses its worth for the company, and its impact if were to be replaced or even if it was to be repaired, in so doing I am able to not only gain more experience and skills, but am also able to learn to make cost effective financial decisions.

Operating Budgets

This is an important concept in my career profession, as it allows me to learn new strategies and to also gain skills on how to prepare future costs and forecasted income, henceforth having an estimation of how a business may perform (Maher, Stickney & Weil, 2012). This is basically important, particularly in most companies, as it allows the company in dealing with debt financing, and also having an estimated revenue and expected future costs, in consequence, being able to offer the best advice on how to deal with such issues in the company.     

Reference

Maher, M., Stickney, C. P., & Weil, R. L. (2012). Managerial accounting: An introduction to concepts, methods and uses. Mason, OH: South-Western Cengage Learning.

TAX RETURN CASE

2017 Federal income tax return

With regard to the 2017 federal income tax return, what is known is the fact that the IRS which is readily available in the government program provides eligible taxpayer with a dozen of options for the brand-name products. In other words, the free file used is regarded as being a form of partnership which exists in commercial partners who have the ability of offering a number of free-brand-name software to families and individuals. At most, seventy percent of the taxpayers are entitled to the IRS free file (2017 Tax Filing Season Opens Today, 2017).

Nevertheless, the tax-free personal allowances-the amount a person can ear before settling any income tax is amounted to a certain percentage. This implies that the benefits for the taxpayers are likely to amounts to $1,400 per month for the coming year.  The impact of an increase in wages is that it has the possibility of driving up the taxable earning threshold of the taxpayers. Although a large percentage of the workers are anticipated to be paying much into the social security, about 12 million will encounter high taxes. According to the federal income tax administration, this will be brought about by the increased ceiling (2017 Federal Income Tax: How Much Will You Owe?, 2017).

Financial suggestions for 2018 that would benefit the Merritt’s from a tax point

The financial suggestions of the federal tax income suggest that the human resource block in the Merritt office is something which has the potential of meeting the requirements of the tax professionals. The main reason for considering is because they are the ones who have the capacity of handing all the tax preparation needs of their organization.  Despite that, it assists in determining their taxes, the truth it enables the management authority to find out every tax deductions which are available so that in return they can get the most from their tax returns.

Additionally, what is perceived to have the potential of assisting the Merritt from the tax point is the alternative minimum tax. For instance, in case the alternative minimum tax could have decreased, it implies that the unreported social security and Medicare could be able to take the credit in case the adjusted gross is to be decreased too (2017 Tax Filing Season Opens Today, 2017).

3. The implications of their stated goals if they were to take your suggestions both negative and positive

As much as the above objectives are concerned, one of the benefiting factors is that low-income taxpayers and moderate-income taxpayers will have the opportunity of obtaining filing their tax returns for free. In this case, it implies that a large percentage of individuals can assist others in completing their return. Similarly, this will offer the IRS an extra time for detecting as well as preventing any form of fraud (Gerald et al., 2017). Beyond the earned income tax credit (EITC) and the additional child tax credit (ACTC) refunds as well as the additional security safeguards; the truth is that the IRS assists in anticipating the issuing of more of the refunds in less than a month.

Despite that, the only disadvantage of this is that it is impossible for a certain return revenue return to take long before being processed because of the additional reviews it mandates. The reason for that is because the taxpayers are always reminded that the state tax agencies have various refund processing timeframes which keep on varying. Similarly, it is possible for the state to make extra reviews so as to assist in ensuring that their revenues are issued properly. Regardless, of that, the taxpayers should understand that they are required to file their tax returns so as to ensure that they exercise is carried out normally (J.k, 2018).

4. Finally, after looking at the information provided in both parts 2 & 3 your final recommendations (summarize) to your clients why you are suggesting the charges that you have recommended.

With regard to the above information, there are a number of things that the taxpayers should take into consideration. The first one entails keeping a record of their tax returns. In other words, the usage of the tax filing software services requires that the adjusted gross income (AGI) to be amounted from the taxpayers’ before-year return o as to assist in verifying their true identity. The reason for that is because the objective of IRS entails working with the state tax agencies as well as the tax industry in addressing tax-related identity theft and/or refund fraud.

Nonetheless, it should be noted that effective protection for the nation and taxpayers’ tax system is one of the remedies of enhancing efficient tax filing season.  The importance of this measure is that it will assist in attacking any tax-related identity from various sources. Although many changes might end up becoming invisible to the nation and taxpayers, it will end up assisting the tax and states in providing new protections (Gerald et al., 2017). Conversely, security requirements are what should be taken into consideration because it effectively protects personal information and tax software accounts.

Since the aforementioned computations doesn’t take into account the credits or deductions of an individual, it is important for taxpayers to understand that their main objective is to get as closer as possible to being refunded by the federal government. Other than forcing them to save, there are no any valid reason/s which can make the state government to hold hostage the tax dollars of the taxpayers (Gerald et al., 2017).

References

2017 Federal Income Tax: How Much Will You Owe?. (2017). The Motley Fool. Retrieved 30 November 2017, from https://www.fool.com/taxes/2017/10/28/2017-federal-income-tax-how-much-will-you-owe.aspx

2017 Tax Filing Season Opens Today. (2017). IRS. Retrieved 30 November 2017, from https://www.irs.gov/newsroom/2017-tax-filing-season-opens-today

Gerald, E. W, Steven, G, & Martha, A.B. (2017). Income Tax Fundamentals 2017. Cengage Learning Press

J.k. lasser's your income tax: 2018 : for preparing your 2017 tax return. (2017). John Wiley & Sons Inc.

Ethics in Accounting

Earnings management can be described as the intentional intervention with the process of external reports with an aim of getting some private benefits. It can also be defined as the acts where the managers or the financial handlers use their judgment within the financial reporting and also in the structuring of the transactions. The aim of these actions is to manipulate the records and mislead the handlers. Ethics recommend the use of qualified strategies in reporting financial matters of the company. Using the virtual ethics framework, the intention and reasons for each action are well accounted for by the financial department.  One should not ignore the rights of the stakeholders and shareholders while conducting personal duties with an aim of receiving accurate and fair information (Gong, 3). Ethics in management indicates the true performance of an organization and must be true and honest according to the books. Unethical behavior is very rational and this is a poor strategy for making conclusions on financial matters.

Decisions made should be done according to the evaluation of the benefits of the company and management in order to get improved and quality incomes. The financial statements at all times should never be tampered with or manipulated for the benefit of one person which is a selfish act on the part of the perpetrator. Accountants and other players in an organization who have moral values view the unethical behaviors of the managers as very unethical and undeserving (Ferrentino et al., 170). Individuals who possess little or no knowledge of accounting are in most cases unlikely to detect the actions of the unethical managers and this is a worrying factor in business.

Accounting method of manipulation according to the managers is regarded as unethical compared to the manipulation of the decision with regards to operational details. This is, however, both unethical since accurate and true information should be provided in all levels and operations of the business. Managers take earnings management to mean good for the business. According to them, it is a way of attracting new and retains more during the close of the year and increases the sales in the following and current year (Burns et al., 150). Deferring of the necessary expenditure into the subsequent years is basically the view of the managers with regards to earnings management especially the operational decisions. The accounting manipulations are regarded as the change of accounting and inventory methods and valuations for personal benefits.

Overstating of the profits and revenues in order to have an enhanced earnings report is wrong and this is perceived as financial shenanigans in accounting. Also the understating of the profits and revenues with an aim of smoothening the net income and decrease volatility is also a bad idea which is unethical in a business. Auditors should look out for the one time sources of revenue to realize the fraud levels happening in an organization (Ferrentino et al., 165). Acquisitions of businesses should also be red flags pointed to the auditors to overlook business operations keenly. Account receivables can also be sources of identifying accounting malpractices in a business and this should be sorted by the auditors. Market shares which are very fake and unbelievable can be termed as fraud activities which are unethical. In the event, the management has manipulated the earnings, the information, and qualities of the records also suffer due to the unethical behaviors.

Works cited

Burns, David J., James A. Tackett, and Fran Wolf. "The Effectiveness of Instruction in Accounting Ethics Education: Another Look." Research on Professional Responsibility and Ethics in Accounting. Emerald Group Publishing Limited, 2015. 149-180.

Ferrentino, Alexandra L., et al. "Ranking Accounting Scholars Publishing Ethics Research in Accounting and Business Ethics Journals." Research on Professional Responsibility and Ethics in Accounting. Emerald Group Publishing Limited, 2016. 163-215.

Gong, James Jianxin. "Ethics in Accounting: A Decision-Making Approach." (2017): 1-3.

Accounting principles

Domingo Corporation changing from the normal depreciation to another method is a positive move to allow the company reduces its cost of operations and also reduce the risks related when computing. This kind of move is known as the accounting method change. The method of depreciating the costs involved is aimed to bring in profits and a reduction in the assets costs in a year. This should be reported through filing an IRS form which indicates the change, justification, and the supporting documents for the change.  

The change in the method used to calculate the rate of estimated residue depreciation is known as the general depreciation method which is used in many cases to compute the depreciation rate of commercial buildings (Weygandt 570). This should be reported by way of giving the rate of depreciation and the tax depreciation level. The consolidated and the separate financial statements describes ways in which an entity has to consolidate another entity, changing of the account due to different owners, preparation of the separate financials and also the related disclosures. This change is known as the consolidated financial statement. This should be reported through a presentation of the statements to the IRA with an indication of the parent in presentation of the financial statement which has been consolidated in its investment subsidiaries.  

Changing the accounting principles is a factor that affects the financial statements. The change in accounting method if not reported could be disastrous to the company. The accounting principles are important and relevant since they allow the reporting of the net loss or income therefore it is important to disclose the information relevant to the departments (Weygandt 577). The accounting principles also ensure that the companies do not cheat in any way while doing the financial reporting.

Work cited

Weygandt, Jerry J, Paul D. Kimmel, and Donald E. Kieso. Accounting Principles. , 2013. Print.

Fair Tax Plan proposal

This paper discusses the issue of income tax reforms which have been proposed by the Congress through the Fair Tax Act of 2015. The issue of income tax reforms has been informed by a large number of expenditures associated with the current system of corporate and personal income taxes. The current income tax policy involves applying a given tax rate to individuals and corporate income and such tax increase with the increase in the income.

 The current tax income rate is normally a graduated one so that higher incomes are subjected to higher rates the lower incomes.  The objective of the tax has been to base the rates on the ability of a person to pay and at the same time ensuring that the tax systems uses minimum costs. The economic objective is to ensure the government collection costs and taxpayer's compliance costs are held at the minimum (Slemrod and Jon, 2). The advantages of the tax plan are that the tax rate is based on a person's income and hence, ability to pay. The policy places the highest tax burden on individuals with higher income and lesser burden on those with lower income. However, this income tax policy has become complex and its administration has been associated with high cost and this defies the basic objective of having a cost-effective tax plan (Slemrod and Jon, 2). The policy has many income taxes that requires a high amount of funds to be administered.

The Fair Tax Act of 2015 has been proposed in Congress which is a sales' tax aimed at replacing the present income structure in the United States. The proposal seeks to address the cost issue by abolishing the corporate and personal income taxes and other taxes imposed on estates, gifts, Medicare, social security, and self-employment. Then a 23 percent retail sales tax is proposed as the replacement and whose administration is to be done by tax authorities in the state (Congress * Gov, 1).The main complication arising from this reform is that a big share income for the high-income earners will be exempted since these individuals spend only a small percentage of their income for consumption (Burman, 1).

 There are various strengths of this reform and which relates to elimination of problems associated with the administration of yearly income tax and reduced cost. Government expenditure would be greatly reduced when IRS is eliminated. Since people would retain their whole earnings, there would be more consumers spending which in turn would increase the productivity, jobs and gross domestic product.  Through a "prebate", a program for cash transfer, the reform would protect individuals with low income from a higher amount of taxes (Congress * Gov, 1). In addition, the reform eliminates the tax gain which means that an investor is able to a compound growth that is tax-free which provides an opportunity for more people to invest especially those who would be discouraged by tax complications (Congress * Gov,1). The reform also consists of various weaknesses that may hinder the realization of the intended benefits of the new Act. The Act would be unfair to senior persons who are not getting an income since they have paid such taxes in their whole lives and would also be required to pay increased sales taxes. In addition, the pre-bate program could be very expensive and taxpayers would find it hard to manage and complex for administering.

Works cited

Slemrod, Joel, and Jon M. Bakija. Taxing Ourselves: A Citizen's Guide to the Debate Over Taxes. , 2017.1-2

Burman, Len.The Trouble with the FairTax.2015. Available at: https://www.forbes.com/sites/beltway/2015/05/27/the-trouble-with-the-fairtax/#52c2cab75d7b

Congress * Gov.H.R.25 – Fair Tax Act of 2015114th Congress (2015-2016).n.d. Available at: https://www.congress.gov/bill/114th-congress/house-bill/25/text

Inductive reasoning and deductive reasoning are useless in accounting

Introduction

Accounting subject has been offered in most of the universities all around the world with the sole aim of being better at what one does regarding the discipline. Recently, the Institute for accountants in America has recognized and established ways in which the accounting principles are highly considered in every institution. One of the main differences involving the deductive and the inductive arguments or reasoning in research is that the deductive reasoning is aimed and has to test the theory while that of inductive is mainly concerned with bringing in new theories derived from the data (Elo and Kyngäs, 2008 p56). For the deductive reasoning, the emphasis is based on the causality while that of the inductive is based on the exploration of any new ideas from a different angle from the research.

Efforts have been made regarding the profession where there have been numerous developments in making sure that the accounting procedures and the standards are increased to the best level possible. This is practically viewed as a chance of making the accounting profession a science other than being termed as a language. However, accounting cannot be stated as being related to science without the reasoning, argumentation and the justification of having the profession as a science (Smith, 2017 p30). The main theme that has been running in the already established field of profession is enabling the individuals responsible for setting standards to deduce the standards. In the context, there is need to consider the role played by both the inductive and the deductive reasoning to develop the accounting theory and the setting of the accounting standards.

Inductive reasoning and deductive reasoning

Inductive reasoning begins with the specification of the observations while making the conclusions just a generalization of the whole process. After there is a selection of the correct research documents, a generalized conclusion can be given based on the situation and the conditions. Every principle that is derived based on the reasoning of inductive is considered theoretically falsifiable. During the inductive process, the observer who is the researcher should be honest, not prejudiced or bias, with an open mind and record everything they observe. A scientific knowledge is formed through the laws and theories after the recording of the observations. The researchers also believe that there is a possibility for one to be able to generalize locally the observations into inclusive and general rules where the scientific options are ratified after verification.  At the conclusion of the research which is verified and constituted after the observations, the theories are hereby constructed (Elo and Kyngäs, 2008 p46). Inductive argument comprises of checking the pattern based on the observations and developing a theory for the pattern in order to come up with a hypothesis. During this research, no theory that is applied practically at the beginning and the researcher has the freedom to determine the next move for the research. At the early stages, no assumptions are made as the researcher knowledge of the research as it will be provided at the end of the research. The researcher uses observations to construct an abstract and to also describe the circumstances of the research.

One of the main advantages of having the inductive reasoning is the fact that there is no need for pre-fabricated model or framework. When the principles are being generalized, verification by way of the logical method must be done. Inductive reasoning towards science has been full of criticism with respect to the aspect of some of the methodologies and the credibility of the processes (Smith, 2017 p36). One of the main issues can be described as the researchers in some sense are being influenced by the kind of knowledge they have since it is limited considering the data to be collected.

Some of them term the inductive reasoning as being a principle of falsifiable since it is basically influenced by the observations.

Deductive argument includes the development of conclusions based on the types of theories which exists and therefore constructing a plan to have a detailed research on the developed conclusions. Deductive reasoning can be developed and explained as from the already provided assumptions in the theory. Some of the criticisms considering the deductive reasoning can be formulated to be on the basis of a misunderstanding. It is no right to expect a theory to be very practical is a wrong expectation and this is the reason as to why the reasoning does not make any sense.

In accounting research, the available databases have made it necessary and also easy for those doing the research to be able to explore the different relationships among the different types of data and therefore get general results by use of the statistical knowledge. Most of the research conducted in accounting uses the inductive reasoning and argumentation. Every researcher has the capacity and the understanding when it comes to performing research and choosing a particular topic for the research (Smith, 2017 p37). Deductive requires a developed knowledge and an understanding of the principles of accounting and any other related field such as finance, sociology, social values, economics and psychology to be able to conduct a research on the deductive reasoning strategy. This makes it possible and relevant to why most of the research is conducted using the inductive reasoning. Considering this choice, it is therefore very clear on why most of the researchers use the deductive and not the inductive method during their research. 

In accounting, the detailed analysis of the deductive and inductive reasoning is not useful. During distinguishing of both the deductive and inductive theories the conclusions are the same and this means that there are no two possible choices from the conclusions. The inductive and deductive have complementary processes used for the construction of the theories in a way that the induction is obtained before the deduction. During theory development, the researcher acts according to the perception of the inductive theory. For the research to make sense an observation is made, evidence obtained, and test the results to get an assumption. Every other person with interest in particular topics present a different version that is based on similar evidence and which eventually triggers a debate and a detailed research is carried out.       

The main objective of this idea is to have an understanding and an assumption that is common and acceptable to all the parties involved. Progress in this particular topic has been caused by the testing of the available assumptions. After having a possible explanation of the research, testing the assumptions commence and this indicates that if the assumptions are not at any fault, the output of the research can be reached upon.

When it comes to theorizing, reasoning is very important as a style of performing the accounting techniques. Developing any theory in the accounting field was done through the inductions. This means the ideas and the theories were formed through the observation method. Since the early 1920s, accounting theories were based on the observation of the way the accountants conducted themselves while at work. This similarly contradicts the method that forms the ideas based on the deductive approach that relies on the logic rather than observations. While using thee developing inductive reasoning after the observation of the way the accountants, the common related practice becomes an accounting conversion, for example, the conservatism doctrines. Researchers who developed theories using the inductive reasoning are always faced with criticism. During the late 70s, some of the researchers were still using the inductive approach but a different reasoning gained its ground making most of them to change their method of doing the research (Bryman and Bell, 2015 p44).  This particular approach was more concerned with the prescription of the specific practices in accounting which means that it was not developed from the already existing practices in accounting. This indicates that the theories for the financial accounting were never formed on the basis of observation but most of them were developed during the time when arguments on which each researcher though possible for the others to follow. Instead of having an inductive argument on the topics, deductive reasoning was applied bringing in the difference.

During this period, the rate of inflation was high in many of the countries and as a result, most of the involved researchers and theorists were doing everything possible to give out the historical costs of accounting. Many kinds of researches were done with an objective of having an explanation and a focus on the methodologies in accounting instead of having particular viewpoints. This was another important step that the accounting researchers took with the goal of having predictive researcher which was different from the prescriptive theories (Soiferman, 2010 p30). Financial accounting developments started in later 1930s and by that time they faced a lot of criticism which were based on the techniques developed. The first developments were used in costs, surplus, values, and capital computation. The development was however not a comprehensive one in the financial accounting since it was a sample review of the practices used in deductive reasoning. Such data assisted in making the conservatism and the historical cost in accounting principle which supported a concept of income that was comprehensive.   

Regarding the standards, the setters brought in the theory of accounting using the conceptual standard and framework. The expectations of the theory in accounting are to allow the standard setters to have them deduced.  In order to develop the accounting theory and the involved project of development, the conceptual framework needs to identify something that can be applied in order to deduce. Due to the global stock market problem in 1992 that brought in new challenges, the United States government inclined towards the increase of the financial markets regulations. 

The arguments against which the involved premises provide reasons supporting the probable truth of the action is in this case defined to be an act of the inductive reasoning.  The inductive argument in most cases uses the bottom to top approach to solving the issue while the deductive type of reasoning uses a particular top to done approach to solve any issue and do specific research according to the accounting techniques (Bryman and Bell, 2015 p42).

Considering the both the inductive and the deductive reasoning, each of these theories provides for the accounting theory which was both used in the past but due to the advancement and the change in technology and other vital details, they have loosed their meaning-making them not very useful in the accounting field. For example, the current accounting techniques require prior input in studies and way to approach an issue unlike the past when the research was considered on the basis of the accountant's behavior and practice.  The deductive reasoning basically starts with the small observations which determine the methodology and develop a theory through working on the related issues and therefore having a defined hypothesis. In many cases, such a theory is observed to have an influence on the data that is submitted since it indicates a high level of research but this is not very useful in the today society where computation and detailed research is done based on the availability and the market trend of the country.

Obtaining or even citing a conclusion even before having the research is not in line with the accounting techniques which require details and the final compilation is done as a result of the finding and not through general assumptions (Bryman and Bell, 2015 p42). Based on the deductive type of reasoning, the hypothesis obtained is used to gather evidence and various observations which are used to give out a final conclusion to the research. Such data is vital to making sure that each individual person has their views heard but at the same time, the content of the reasoning should not be based on just observation. There needs to be detailed research to provide the best results for the particular subject in question which is in accounting. The reasoning involved in the inductive arguments in accounting is termed to be not strong and there need to be supporting arguments regarding the subject which is used to draw a conclusion. The inductive argument is observed to be moving from the specific conclusions and choices to the general choices. This indicates the lack of proportional standards when it comes to providing the final data that will be based on a research.   

Conclusion

The deductive and inductive reasoning are particularly two kinds of explanations that are applied in the field of research and which are used to develop a hypothesis in order to have a conclusion based on the information which can be true. Inductive argument regards the subsequent events in order to make up a decision and a generalization (Soiferman, 2010 p26). On the other hand, deductive argument regards the general information provided as the base in order to arrive at a decision. Using this both criteria, it is evident that the meaning of the research and the reasons are already inconclusive and unreliable making them general methods of accounting which do not make any sense.     

References

Bryman, A. and Bell, E., 2015. Business research methods. Oxford University Press, USA.

Eisenhardt, K.M., Graebner, M.E. and Sonenshein, S., 2016. Grand challenges and inductive methods: Rigor without rigor mortis. Academy of Management Journal, 59(4), pp.1113-1123.

Elo, S. and Kyngäs, H., 2008. The qualitative content analysis process. Journal of advanced nursing, 62(1), pp.107-115.

MÜHL, J. K. (n.d.). Organizational Trust [recurso electrónico] Measurement, Impact, and the Role of Management Accountants.

Sekaran, U. and Bougie, R., 2016. Research methods for business: A skill building approach. John Wiley & Sons.

Smith, M., 2017. Research methods in accounting. Sage.

Soiferman, L.K., 2010. Compare and Contrast Inductive and Deductive Research Approaches. Online Submission.