Skip to ContentGo to accessibility pageKeyboard shortcuts menu
OpenStax Logo

Exterior photograph of dry-cleaning business.
Figure 4.1 Mark’s Dry-Cleaning Business. (credit: modification of “Dry Cleaning” by Donald West/Flickr, CC BY 2.0)

As we learned in Analyzing and Recording Transactions, upon finishing college Mark Summers wanted to start his own dry-cleaning business called Supreme Cleaners. After four years, Mark finished college and opened Supreme Cleaners. During his first month of operations, Mark purchased dry-cleaning equipment and supplies. He also hired an employee, opened a savings account, and provided services to his first customers, among other things.

Mark kept thorough records of all of the daily business transactions for the month. At the end of the month, Mark reviewed his trial balance and realized that some of the information was not up to date. His equipment and supplies had been used, making them less valuable. He had not yet paid his employee for work completed. His business savings account earned interest. Some of his customers had paid in advance for their dry cleaning, with Mark's business providing the service during the month.

What should Mark do with all of these events? Does he have a responsibility to record these transactions? If so, how would he go about recording this information? How does it affect his financial statements? Mark will have to explore his accounting process to determine if these end-of-period transactions require recording and adjust his financial statements accordingly. This exploration is performed by taking the next few steps in the accounting cycle.

Order a print copy

As an Amazon Associate we earn from qualifying purchases.

Citation/Attribution

This book may not be used in the training of large language models or otherwise be ingested into large language models or generative AI offerings without OpenStax's permission.

Want to cite, share, or modify this book? This book uses the Creative Commons Attribution-NonCommercial-ShareAlike License and you must attribute OpenStax.

Attribution information
  • If you are redistributing all or part of this book in a print format, then you must include on every physical page the following attribution:
    Access for free at https://openstax.org/books/principles-financial-accounting/pages/1-why-it-matters
  • If you are redistributing all or part of this book in a digital format, then you must include on every digital page view the following attribution:
    Access for free at https://openstax.org/books/principles-financial-accounting/pages/1-why-it-matters
Citation information

© Dec 13, 2023 OpenStax. Textbook content produced by OpenStax is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike License . The OpenStax name, OpenStax logo, OpenStax book covers, OpenStax CNX name, and OpenStax CNX logo are not subject to the Creative Commons license and may not be reproduced without the prior and express written consent of Rice University.