Managerial Accounting for Many Corporations,

¶ … Managerial Accounting

For many corporations, the kind of accounting system that they are using will have an impact on the way they are reporting their earnings to investors. This is because these figures will offer specific insights about how changes in customer demand are impacting these results. To determine how a cost accounting system works requires evaluating the actual procedures that are used by a corporation. This will be accomplished by examining Apple, the procedures they are utilizing and how they are implemented / managed. Once this occurs, is when we can see how this is influencing management's decisions and the firm's business model.

Apple's Cost Accounting System

The basic accounting system that Apple is using is what is known as generally accepted accounting principles (GAAP). Under this method, the company will report revenues during the quarter that the actual sale took place. If there are additional services that are being utilized, they will be recorded during the quarter that the earnings were received. The reason why Apple is using this system is to provide everyone with a more accurate assessment of: the changes in their business model and the long-term impact that they are having on the company. Once this occurs, is when executives can be able to provide more accurate information and guidance about future earnings. This is when investors will have greater amounts of confidence in these figures. It is at this point that they can make precise assessments about the underlying strengths of the company and the effect that it is having on their bottom line results. ("Apple," 2011)

Evidence of this can be seen by comparing the numbers from the third quarter 2011 with the fourth quarter 2011. Inside the report, Apple is illustrating how the sales for their different products increased. The way that this is accomplished is by booking the revenues in the quarter that they were received. For example, using the I Tunes store, the firm reported an increase of7% on a quarterly basis. While other products such as portable devices saw an increase in their earnings of 30% in one quarter. These figures are significant, because they are showing how the revenues are accounted for during the actual quarter that they are received. This is what makes their earnings more accurate and reliable. ("Apple," 2011)

How this is System is Applied and Evaluated?

The way that this system is applied, is every quarter the management will provide investors with guidance about the earnings and future projections. If there are any kind of positive or negative changes, managers will let analysts know about what is happening by providing them with a range that is more precise. Once this occurs, is when investors and analysts will be able to effectively evaluate the company. ("Apple," 2011)