Accounting Theory Research and Development

Question: Discuss about the Accounting Theory for Research and Development. Answer: Introduction This study deals with understanding the differences between Research and Development. In this particular assignment, importance of Research and Development has been identified that helps business firms in gaining high revenues in the upcoming financial year (Rehfuess et al. 2013). There is no hard and fast rule that if a company spends huge on Research and Development, then it will achieve the desired profits. Discussion on the nature of differences between Research and Development Research and Development in industry is intimately related with given process by which new products as well as new forms of old products with the help of technological innovation. Research and Development reveals the systematic use of scientific knowledge for improving manifestations for not meeting with universal approval. It helps in developing new knowledge as well as application of scientific or engineering knowledge for connecting with knowledge for other aspects (Harper, Jones and Marcus 2013). Research= Basic Experimental Research Development= Exploitation of discoveries Research and Development in Business proves critical for marketing aspects. Intense competition has made research and development important prospects. Conducting research and development activities will help business firm for analyzing consumers trends, needs as well as demands. There is no guarantee that higher spending to Research and Development will lead to higher profits, greater market share as well as more creativity and better products and services (Harper, Jones and Marcus 2013). This particular concept will investigate activities whereby business takes deliberate decisions for conducting certain activities. It has an intention for general strategic actions for future growth actions. It aims in discovering attributes that will lead to new products, procedures as well as bringing improvement in the existing products or services. Discussion on how Research and development are accounted for and why firms engage in Research and Development Business firms engages in research and development so that they have better understanding of present market condition and deliver goods and services. Research and Development helps high-tech firms on the cutting edge of advancement of new technology (Rehfuess et al. 2013). Most of the consumer goods companies aims at spending large sum of money especially on improved old products. For instance, Gillette spends lot of money on Research and Development every year for ongoing attempts in designing of more effective shaver. On the contrary, some other company believes in spending small percentages of their revenues on Research and Development like under 5% (Rehfuess et al. 2013). Research and Development is important for business firm because firms should understand changing market condition as it is crucial to survive in the fast changing environment. It helps business firm to cope up with continuous technological change as well as intense competition among nearest competitors (Harper, Jones and Marcus 2013). It will help business firm in getting idea on changing consumer preferences and considers as fundamentals to marketing. Advantages are markets that come from understanding of marketing needs. RD will give efficient production process for business organization. Conclusion At the end of the study, it is concluded that Research and Developmental activities provides great help to the business organization. This is because conducting market research will help in gaining information regarding customer changed trends and preferences. Addition to that, it gives proper understanding regarding current market position and business offerings in the near future. Reference List Harper, C., Jones, N. and Marcus, R., 2013. Research for development: A practical guide. Sage. Noyes, J., Gough, D., Lewin, S., Mayhew, A., Michie, S., Pantoja, T., Petticrew, M., Pottie, K., Rehfuess, E., Shemilt, I. and Shepperd, S., 2013. A research and development agenda for systematic reviews that ask complex questions about complex interventions. Journal of clinical epidemiology, 66(11), pp.1262-1270.