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Recording Business Transactions Costel Iulian Manolescu – UWL: 21549997
Recording Business Transactions Table of Contents Introduction ................................................................................................................................ 3 Description of recording the business transactions ................................................................ 4 Stating the company background ........................................................................................... 4 Accounting principles ............................................................................................................ 5 The usefulness of the accounting in Sainsbury's .................................................................... 5 Key steps of accountancy cycle ............................................................................................. 6 Conclusion .................................................................................................................................. 7 References .................................................................................................................................. 8 Page 2 of 9
Recording Business Transactions Introduction The term accounting in business plays a key role in executing business activities smoothly. It assists the business to get a clear view of quantitative information regarding financial transactions. This important information is used for making decisions in business. Accounting can keep records about income, and expenses, and maintain statutory compliance in business. Accounting involves crucial activities such as summarising the reports, verifying, keeping track and sharing the report of business transactions information. The two methods in accounting that are primary entry and double-entry bookkeeping help the business by maintaining all the financial data in an efficient way. The essay will provide the various important accounting system in the context of a chosen business company. The background of the respective company will be discussed here in detail. Moreover, the concept of specific term accounting principles will be illustrated in the essay. Furthermore, every step of the accounting cycle will be elaborated on here. Page 3 of 9
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Recording Business Transactions Description of recording the business transactions The recordkeeping system consists of various steps that assist to summarise the various financial transactions in business. Recording financial transactions take a significant role in generating more revenues in business. Accountancy in business makes the documentation of transaction reports easier by sharing information regarding debit, credit and other financial data ( Herawati et al.,2020). Stating the company background The following essay is discussing the respective company Sainsbury’s from the retail business industries. The selected company is one of the 2 nd largest British supermarket chains selling high-quality food items with the best value, groceries, homewares, clothing, electricals and more. The respective business company constitutes a 14.9% share of the whole supermarket chain in the United Kingdom. The originator of the Sainsbury’s is John James. The foundation year of the selected retail company is 1869. The company headquarters is in London and the CEO of the respective retailer is Simon Roberts who takes the major role in operating the business (sainsburys, 2022). The total store number was around 1428 across the country according to the data in 2019. As of 2021, the total number of workforces is 180000 in the context of Sainsbury’s. The net income and revenue of the company were £280 m and £280 million respectively. The respective supermarket chain is committed to simplifying business operations at a pace. The cost-saving session of the company accelerates more investment for the improvement of food quality. Moreover, their innovation strategies are aimed at delivering great quality products to shareholders and customers. The portfolio brand of the respective company is Tu, Habitat, Agros, Sainsbury’s Bank and Nectar for supporting the core business of the food company. The brand reputation and good brand heritage can be built on the basis of their innovation range, low price and Page 4 of 9
Recording Business Transactions quality. The passion of the Sainsbury’s is to serve delicious food and offer consistent prices to get a competitive advantage in the marketplace (sainsburys, 2022). Accounting principles Business firms usually follow some crucial regulations or guidelines in the business environment. It aids the business company in keeping track and documenting of financial transactions. The basic principles of accounting can make accounting standards by inspecting all the collected financial information. It acts as a key factor for the further expansion of business (accountingtools, 2022). The basic set of accounting principles is consistency, materiality, conservatism and many others. The usefulness of accounting in Sainsbury's Accounting plays a fundamental role in making the concise and summarised form of business transactions. It determines the financial condition of the company by preparing financial statements. It is very essential for the management professionals of the respective company Sainsbury’s while making quality decisions for better results in future. Investors can get help while investing money in the respective supermarket chain from the demonstration of financial statements such as profit or expenditure statements, cash flows and other information over the accounting time period ( Weygandt et al.,2018). The selected retail company can identify the extra expenses in the business that basically creates hindrance in generating more profits. Apart from that, the proper forecasting of the budget, capital circulation, and distribution of cash of the Sainsbury’s can be accomplished with the help of an accounting system (Woodruff, 2018). Moreover, from the recording of financial transactions in business, the respective company can get assurance from the bank at the time of requirements of bank loans. Primary bookkeeping in accounting helps the business Page 5 of 9
Recording Business Transactions company to keep all important financial data before the separate ledger entry. If the bookkeeper of the Sainsbury’s pursues the double-entry in accounting, then there will be no chance of getting mismatches in the cash balance due to different column sites of credit and debit. Key steps of the accountancy cycle The well-designed accounting comprised several stages to make the whole recording procedure simple and easy. The initial stage is to assemble all all-business information that is collected from original sources. The respective company Sainsbury's is required to follow the accuracy and relevancy of the financial sources. The 2 nd step is the selected retail company Sainsbury's needs to keep all records of financial data by using a double-entry bookkeeping system. It assists the company to get a clear presentation of cask allocation for every activity of the business. The next stage comes with the ledger entry and later the formation of a sheet of trial balance (accountingtools, 2022). It is very crucial for Sainsbury's while there are needs to understand the condition of left balance. The following stage is considered as the checking of adjustments and evaluating worksheet. After that, if the bookkeeper of the Sainsbury's came across journal entries for the maintenance of financial records in an efficient manner, then they can understand the financial condition before preparing financial statements. The upcoming stage comes with the making of consistent and precise forms of financial transaction records such as financial statements. It is the essential stage for the retail company Sainsbury's in order to establish a competitive advantage. The last step refers to sharing the report-related information on the basis of this the chosen company Sainsbury's can understand the overall performance of the business ( Penman et al.,2019). Page 6 of 9
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Recording Business Transactions Conclusion Accounting acts as an integral part of the business that can assure the future progress of any business company. It helps the manager to take strategic decisions which bring a high range of profits in business. The formation of financial statements is one of the vital duties of the accountant that helps the business to expand in upcoming future. The essay has provided an overview of the renowned supermarket from the retail industry of the UK namely Sainsbury's. Accounting principles have been defined clearly in the essay. The significance of the particular system that is accounting on the Sainsbury’s has been illustrated here. Furthermore, the essay has analysed the stages of the accountancy cycle. Page 7 of 9
Recording Business Transactions References accountingtools, (2022). Accounting principles. [Online] Available at: https://www.accountingtools.com/articles/what-are-accounting- principles.html#:~:text=Accounting%20principles%20are%20essentially%20general,similar %20to%20the%20Ten%20Commandments.[Accessed 17 November 2022]. accountingtools, (2022). The accounting cycle definition. [Online] Available at: https://www.accountingtools.com/articles/the-accounting-cycle[Accessed 18 November 2022]. Herawati, N.T., Dewi, L.G.K. and Dewi, G.A.K.R.S., (2020), December. Development of Android-Based Accounting Cycle Learning Applications to Improve Technology Skills in Accounting Students. In   5th International Conference on Tourism, Economics, Accounting, Management and Social Science (TEAMS 2020)   (pp. 98-104). Atlantis Press. Penman, S.H. and Yehuda, N., (2019). A matter of principle: Accounting reports convey both cash-flow news and discount-rate news.   Management Science ,   65 (12), pp.5584-5602. sainsburys, (2022). About us. [Online] Available at: https://about.sainsburys.co.uk/about- us[Accessed 18 November 2022]. sainsburys, (2022). Our business strategy. [Online] Available at: https://www.about.sainsburys.co.uk/about-us/our-business-strategy[Accessed 18 November 2022]. Weygandt, J.J., Kimmel, P.D. and Kieso, D.E., (2018).   Financial Accounting with International Financial Reporting Standards . John Wiley & Sons. Page 8 of 9
Recording Business Transactions Woodruff (2018). The Role of Accounting in Business. [Online] Available at: https://smallbusiness.chron.com/role-accounting-business-459.html[Accessed 18 November 2022]. Page 9 of 9
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