Contractor’s Chart of Accounts – Completed Contract or Percentage of Completion Method
Minimum Bottom Line Profit Should Average 9.4%!
For Trades & Subcontractors, at Least 11%
After Income Taxes Are Paid!
The contractor’s chart of accounts is significantly different than the traditional chart of accounts. First off, the layout is more dependent on the balance sheet than the income statement (profit and loss) accounts. Furthermore, the income statement accounts are laid out to present a resource based costing presentation than a job costing format. To add another layer of complexity, the contractor’s chart of accounts is somewhat oriented towards the method of accounting selected by the contractor.
This article will explain all these variances and how to choose the proper chart of accounts for your contracting company.
To understand the appropriate selection for your entity, this article first explains the slight difference with the chart of accounts related to the completed contract or percentage of completion method that contractors utilize for accounting purposes. The second section below will cover the income statement and it will finish up with a few helpful hints.
Throughout, there is sprinkled in some of chart of accounts layout to reflect the subject matter at that point.
Completed Contract or Percentage of Completion Method
The accounting method selected has a significant bearing on the chart of accounts for a contractor. The two methods are:
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