Research Paper Example on Accounting in a Firm

Date:  2021-04-08 03:56:01
6 pages  (1518 words)
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Middlebury College
Type of paper: 
Research paper
This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.


Alexander, D., Britton, A., & Jorissen, A. (2007): International financial reporting and analysis. London: Thomson Learning.

Bonham, M., & Ernst & Young. (2008): International GAAP 2008: accepted accounting practice under International financial reporting standards. Chichester, West Sussex, England: J. Wiley & Sons.

Keith. G (1999): " Customer Support: Across industry study of distribution channels and strategies" International journal of physical distribution & Logistic Management, Vol.29 Issue 6 pp 374-398

Paolo.G, Nieola.S & Lucrezia.S. 2007: Performance measurement of the After-sales service network-Evidence from the automotive industry, Volume 58, Issue 7 September 2007, pages 698-708.

Sondhi.C, & Taub, Scott A. (2008): Revenue Recognition Guide 2009. Cch Inc.

The United States. (1997): Financial Accounting Standards Board's rule: Hearing before the Subcommittee on Capital Markets, Securities, and Government Sponsored Enterprises of the Committee on Banking and Financial Services, House of Representatives, One Hundred Fifth Congress, first session, October 1, 1997. Washington: U.S. G.P.O.



Industries similar to businesses are started with a motive of making profits. Profitability of the Firm is an essential element in determining the success and future investments in the industry. In particular, automotive industries are the major world economic drivers as they are linked directly or indirectly to major macroeconomic elements. For growth, expansion into different niche and improvement of investment capacity, revenue recognition must take place at the right time. In any organized system aimed at achieving revenue, time is an essential element. Revenue is a dynamic component and may be obtained based on several criteria involving performance, collectability, and measurability. About performance, the aspect of income considered occurs when the perils and rewards have been shifted from the industry to buyers, and when the industry lacks complete control over the purchased vehicle. And finally, as a result, that the funds for which the vehicle is bought will be submitted.

On the other hand, Collectability comes in because the automobile product has been purchased and the industry is expecting some income in return. The final frame of revenue majors on measurability, aspects asserting that the cost and revenue that is likely to accrue from the sales can be measured and verified as soon as the transfer process is finalized. Automotive being a multi-billion institution and world economic base centers in proper timing as any miscalculation or delays in transaction recording may result in accounting error that risks too high losses (Bonham, Ernst & Young 2008). It is an event that is likely to shake the financial stability and bring in issues questioning accountability and transparency of the concerned employee.

Position Regarding Timing and Recognition of Revenue

The greatest businessmen and controllers of the world economy floated a phrase stating," time wasted can never be recovered" A statement treated as a principle is most of the large businesses. I, therefore, conquer with the position because of the following importance accruing as a result of accurate revenue timing. Taxation is one of the critical drawbacks to the entire revenue acquired. For strategic planning and efficiency in operations of the business, it is paramount for the industry to identify revenue obtained so as to know the exact amount that the government is likely to have to budget in their order of preference (Paola, Niela & Lucrezia 2007). It is key to the industry to determine the specific elements of their operations where the government has elevated taxation rates and device ways of going around and lowering the expenses so as not to overburden the system.

Automobile industries are multi-national companies, and therefore, the nature of returns received is likely to vary from one nation to another. For diversification and identification of the new markets, revenue timing is critical. It is not only about income creation but an aspect safeguarding the future of the business. Notably, markets vary in some returns that they invest into the firm. An element defined by the economic status of the concerned country, the strength of the currency and the disposable income of the consumers. For the industry to succeed, it should, therefore, be able to identify specific countries that are capable of generating adequate returns for the benefit of the automobile industry (Keith 1999).

Furthermore, stability and security of employees are dependent on the revenue gathered. Promotion and other motivations that the industry is likely to offer to its staff are dependent on the income collected. Employees will, therefore, strive harder and make necessary efforts to ensure maximum profit (Alexander, Britton & Junssen, 2007). Under the same note, investment component emerges. For investors to factor their funds into the company, they will tend to check on the revenue component reflected by the net profit from the various financial statement.

From a professional point of view and business knowledge, no industry can exist without sourcing for funds in the form of loans from major financial institutions. It is important in boosting the net worth of the business and promoting their operations. For an industry to qualify and receive loans from any financial institution, it must present details of past transactions to ascertain that it is capable of raising the loan from the revenue. The sense is to prove to the institution that they cannot default I payment. All these emanate from the right timing of income and keeping necessary records.

Finally, for the benefit of business reputation, revenues needs to be recognized timely. The significance of this is to enable the company to keep some funds for advertisements, sponsorships, and donations. The motive here is to make the particular automotive industry famous just to build confidence on the side of the people.

Evaluation of the Findings

The above-identified findings are very crucial to the performance of the industry. For example, Taxation, every industry is key to the development of the nation where it is located, and therefore payment of taxes are mandatory (Sondhi & Taub, 2008). Since the amount is considered from the revenues made, it is of significance for it to be planned prior the deduction. Also, it has been proven beyond doubt that these institutions, because of their financial potential have to borrow funds from stronger economic, monetary bases like World Bank. Before this is done, the proper assessment must take place for issuance to occur. It explains why timing is critical for proper bookkeeping and accounting summary which can act as the best alternative used in for timely revenue recognition. In a similar context, investors and donors are also likely to question about the transparency, net worth of the industry, plans and other aspects that may make them intervene to improve the operations of the industry (United States, 1997).


In Conclusion, the automotive sector is one of the pillars that every country depends on for taxation. The fact that it controls billions of shillings makes it be viewed as a productive sector capable of providing employment, controlling oil consumption of the country and influencing operations of all other aspects of the economy including a transport system. Other issues captured in the findings that held proper significance included; expansion of the new markets, investments, employment, loans from financial institutions, advertisements, sponsorships and even donations. An important aspect such as research and development which is essential for the future planning of the industry is also part and parcel of the industry. Success is believed to be a step by step journey that requires strategic planning fueled by proper decision making and adequate funding. I, therefore, support the findings since they can be proven beyond doubt.


To: Manager, Automobiles Company

RE: Revenue recognition

It is my pleasure to air out the following issues concerning the position of your company. I must confess that your business is doing better regarding revenue maximization, but on the other note, it seems like much income can still be gathered from the daily sales. According to my investigation, it is clear that your company is not doing proper revenue assessment that results in incompetent decisions making it not to compete effectively.

According to the current company position, it seems that you've not been pay taxes adequately, investments in the new niches have been limited, and your business has failed to invest in research and development. These are the pillar that can make your company successful and therefore you should adjust, find ways of recognizing revenue at the right time to prevent delays that may pose problems to the operations of the enterprise.

Another important area that captured my attention is the fact that as at now you cannot borrow loans of a certain amount. Restrictions have been made against your company, and therefore you stand no chance of borrowing money. Furthermore, there are chances that if your enterprise continues this way, it may collapse shortly.

To bring sense to the motive of carrying out research in your business, I must inform you that appropriate recognition of revenue can help you evade the problems and regain status. An alternative to this can be accurate record keeping of the accounting books to ensure transparency in the recorded cash flow within the company. In this manner, the business will be able to identify the expenses that need to be settled so as to remain with the actual profits for future planning.

Thanks in advance.




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