This paper examines the accounting cycle used by La Rue Catering, a small home-based catering company that serves weddings, birthdays, and anniversaries. The paper traces each stage of the cycle, from daily transaction identification and QuickBooks data entry to weekly journal balancing, monthly reconciliation, and quarterly closing by an outside accountant. It also describes the distinct roles played by the owner, one full-time employee, and the accountant in maintaining accurate financial records, managing payroll, and fulfilling tax obligations. The case illustrates how even a micro-business can implement a systematic accounting cycle to support compliance and operational control.
The paper uses a case-study approach to illustrate accounting principles. Rather than defining terms abstractly, it shows how concepts such as reconciliation, journal entries, and quarterly closing operate in practice. This technique is effective for applied business courses where connecting theory to real operations is the primary learning goal.
The paper opens with a brief profile of the business and its owner, then moves through the accounting cycle in time-ordered stages: daily transactions, weekly balancing, monthly reconciliation, and quarterly accountant review. A separate section identifies the three roles involved before a short conclusion ties the discussion back to the universal goals of any accounting cycle. The structure is linear and practical, suited to an introductory accounting course.
La Rue Catering is a small catering company owned and operated by a single proprietor. Located in a middle-class neighborhood, the business primarily caters weddings, birthdays, and anniversaries, providing both food and decoration services for parties and special occasions. The owner operates out of her home, where she maintains a storage room stocked with the products and food items needed for the business.
The company is managed by the owner with the support of one full-time employee. Whenever additional help is needed for food preparation or service, she employs temporary staff through an outside agency. La Rue Catering accepts two major credit cards — Visa and MasterCard — as well as cash, but does not accept checks. The owner maintains a straightforward accounting cycle to keep proper financial records for tax and bookkeeping purposes and to ensure compliance with tax laws.
The first major step in the accounting cycle is proper record keeping. The owner uses QuickBooks, a software solution widely used by small business owners for its affordability and ability to support smooth business operations throughout the accounting cycle. All inventory is entered into QuickBooks, allowing the owner to monitor stock levels, determine when supplies are running low, and see exactly how much of any product is on hand. QuickBooks automatically deducts any item from inventory once it is used. The owner does not keep a large inventory on hand, but finds it more economical to make bulk purchases of non-perishable items such as napkins and utensils.
All transactions — including booked and completed occasions — are entered into QuickBooks. Because this business does not generate daily transactions, the first step on any day when transactions do occur is identifying each transaction or recognizable event. At the end of each business week, the owner completes her accounting cycle for that period.
At the end of each month, the owner prepares a transaction log that differentiates the various types of transactions, such as credits, debits, and inventory movements. The next step is classifying and balancing the store's finances. This requires separating credits, debits, inventory, credit card transactions, and cash. Any cash collected must match the corresponding deposit slips and the figures recorded in QuickBooks. The owner also keeps a manual journal as a backup, recording all necessary information to separately track incoming cash, credits, debits, and expenditures. Once the journal is balanced and all entries are current, she files the credit card receipts and prepares a cash deposit.
At the beginning of each month, the owner balances the previous month's journals, verifying that all credits and debits have been posted to the business account. Once all transactions are matched and the accounting journals reconcile with QuickBooks, she closes out the prior month's accounting. If any discrepancies arise, she reviews the records to locate the error and makes the necessary corrections. Missing credits prompt her to locate the corresponding credit card receipt and contact the bank.
The owner also pays all bills on Tuesdays and places orders for new inventory to replenish low stock. She pays herself and her full-time employee twice a month on a salary basis. When temporary staff are used, she pays the staffing agency for the services rendered. Understanding bank reconciliation is a critical skill here, as it ensures that the business's records and bank statements remain in agreement.
The accounting cycle for each business is different; however, all cycles share the same goal of ensuring that proper debits and credits are posted to the business account and that accounts are reconciled. La Rue Catering's owner handles most of the accounting cycle herself, with an accountant visiting the business periodically to verify that everything has been done correctly. The full-time employee is primarily involved in the inventory and sales aspects of the cycle, while the accountant's main role is to confirm that all financial documents are in order and all financial transactions are recorded accurately.
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