Assessment 1

Sample of Essay on a selected Company 

 This essay is based on Burberry Plc, my selected Company
from the Retail Sector. The following areas will be covered in
the essay. 
1. Brief introduction of Burberry Plc 
2. An explanation of the accounting principles at Burberry Plc
and the importance of accounting at Burberry's 
3. An explanation of the main process of accounting at
Burberry 
4. Harvard referencing will be used in the essay where
necessary.

Introduction
Burberry is a British luxury fashion house established in
1856 by Thomas Burberry and headquartered in London. It
currently designs and distributes ready-to-wear,
including trench coats, leather, accessories, footwear
fragrances, sunglasses, and cosmetics.
The CEO is Christopher Bailey. Burberry's is a Public Limited
Company and trades on the London Stock exchange under the
ticker symbol BRBY; they are also part of the FTSE 100
(Financial Times Stock Exchange), currently trading at
1756.00 pence, which is £17.56; Burberry has a 52-week high
of 2074.00 pence and a 52-week low of 1473.00. They trade
an average daily volume of 1.4 million shares, and their
Market Capitalisation is 6.8 Billion. They have a total of 9293
employees and 421 locations.
2. Accounting principles are rules/concepts and guidelines
organizations follow when reporting and recording financial
information. All industries follow standards and procedures,
and accounting is no different. Below are the various types of

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Accounting Principles that the Accounting department of
Burberry's would use.
The types of Accounting Principles
Accounting principles apply to all Businesses, and Burberry's
is no exception. Business Entity This Principle indicates that
there should be a separation of the business entity (Burberry)
finance and that of the owner, partners, shareholders, and
other related Businesses. Money Measurement, This
Principle indicates that all transactions at Burberry should
have a monetary value and be measured financially so they
can be recorded in accounting records. Going Concern is
about the Business operating at Burberry continuously, and all
transactions are recorded with this assumption in mind.
Without this principle, Burberry cannot obtain loans, other
credit faculties, etc. Cost: All assets are recorded on a cost
basis, not net realizable or market value. Depreciation is
considered when calculating the Net book value, but we
record the cost before deducting depreciation. Dual
Aspect All transactions must follow the double entry
principle, which is where there is a debit, there should be an
equal amount of credit, and these transactions are recorded in
their respective ledgers. Matching This principle indicates
that expenditure for a period must be matched with the same
period's revenue. Matching is essential to ascertain the correct
profit and loss for the period. Accrual This concept is
the most fundamental principle of accounting, which
requires recording revenues when they are earned and not
when they are received in cash and recording expenses when
they are incurred and not when they are paid. GAAP allows
the preparation of financial statements on an accrual basis
only (and not on a cash basis). Consistency To be able to
compare Financial statements with other periods, it is
essential that the method we use are consistent. Any change of

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method must be stated, and the effects the new method has on
the Financial Statements. Objectivity This principle indicates
that the recording of Financial transactions should be backed
by documentary evidence such as purchase invoices for
purchases and sales invoices for sales etc. Materiality This
concept/ principle indicates that if the disclosure or disclosure
of information might influence the user of Financial
information, then such information must be
disclosed. Prudence This principle is about acting in a safe
manner. Being careful in anticipating profit but certainly
make provisions for losses, hence provision for doubtful
debts. Realisation This principle indicates that revenue is
recognised once earned such as when goods are delivered or
services rendered. This is the time we expect customers to
pay. The following are the actual steps in the Accounting
process 
3. An explanation of the main process of accounting at
Burberry.
 Identifying the Transaction

The Transactions in my chosen Company, Burberry, are in the

retail / Manufacturing sector. They sell to wholesalers and
retail customers. They manufacture their products; hence they
have Purchasers and Customers. The following source
documents are fair to assume are operational, called Source
documents. Preparing Source Documents. Invoices to
document transactions such as Sales and Purchase invoices;
when inventory is returned to Suppliers and Customers return
to Burberry, they will use other source documents such
as Debit and Credit notes. Receipts will be received from
suppliers. Likewise, Burberry will give to customers. Another
source document will be pretty cash vouchers used for the
small office expenses. From Source Documents, transactions
will be entered into the Books of Prime entries, Credit Sales

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and Credit Purchases will be entered into the Sales Day
book and Purchases day book, respectively. When we return
goods to suppliers and customers, these will be entered into
the Purchases return day book and Sales return day
book. The cash book is another book of prime entry in which
income received will be recorded and payments made to
suppliers etc. The final source used is the Journal, which
records less common transactions such as Bad debt, correction
of errors, wages/salary, etc. 

The next step in the Accounting process is the Ledgers;

these are T accounts with a debit and credit side (Double
entry). We have a Sales Ledger, which records individual
credit customers; Purchase Ledger, which records individual
credit suppliers. We also have General Ledger – This is the
double entry. All aspects of the Business have Ledgers, such
as Capital, Bank, Cashbook, Non-Current Assets, Current
Assets, Sales, Purchases, Sales Return, Purchases Return,
Non-Current Liabilities, Current Liabilities, Salary, and all
Expenses. All Ledgers are closed at the end of the period and
transferred to the following Accounting process, the Trial
Balance. It summarizes all the debits and credits from the
various ledger. The figure on the debit and credit sides should
be the same. From the Trial Balance, the two main Financial
statements are created. The next step in the Accounting
process is to prepare the Statement of Profit and Loss, also
known as the Income Statement, which lists all the Revenue
and Expenses for the twelve months. Then the Profit or Loss
from this statement is carried to the Statement of Financial
Position, also known as the Balance Sheet. The Statement of
Financial Position lists Burberry's Assets, Liabilities, and
Capital/ Equity.  

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