Category: Construction Industry Standards
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Billings in Excess
‘Billings in excess’ is a construction industry financial term referring to the dollar value of charges to customers in excess of the costs and profits earned.
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Hard and Soft Costs With Construction
A contractor must understand the difference between hard and soft costs in order to properly markup assignable costs to determine the final sales price.
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Restoration Contractors – Business Dynamics
Restoration contractors face a different set of business dynamics than the traditional new home builder or remodeler. Unlike the builder and remodeler, restoration companies deal with a third party in their contract negotiations and performance, the insurance underwriter.
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Setting Up Item Codes for Contractors
A common problem for contractors is setting up item codes with accounting software. Most accountants fail to fully understand the concepts behind item codes.
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Contractor’s Audit Guide – Introduction to IRS Audits
In 2009, the Internal Revenue Service issued the Construction Industry Audit Technique Guide (ATG) for use by IRS agents and for contractors.
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Contractor’s Chart of Accounts – Completed Contract or Percentage of Completion Method
The contractor’s chart of accounts is significantly different than the traditional chart of accounts. The layout is more balance sheet driven.
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The Contractor Subcontractor Relationship – An Understanding
With construction, no other mutual bond has such a high dependency on each other as the contractor subcontractor relationship. If the relationship is developed properly and with a mutual understanding, it can be very successful.
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Open Job Cost Status Report
The Open Job Cost Status Report identifies a project’s actual costs of construction, amounts borrowed or financed, and any customer payments made to date. The net result is the contractor’s net investment into the respective project.
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Markup in Construction – Fundamental Understanding
Markup in construction has a very simple definition, it is the amount added onto costs to create a sales price. Notice something really important with that definition, it does not define profit.
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Cost Codes – Subset of Item Codes
Cost codes are unique identifiers assigned to items in an inventory sold individually or as a part of an assembly. The goal is to track the final outcome of the item(s) sold against the original estimated cost of the item.