Percentage of Completion Method for Accounting in Construction
Minimum Bottom Line Profit Should Average 9.4%!
For Trades & Subcontractors, at Least 11%
After Income Taxes Are Paid!
With construction accounting, the percentage of completion method is the preferred tool to account for revenues and direct costs of construction. If you own a contracting business, this is the best method of accounting. Learn how percentage of completion method for accounting in construction is calculated and recorded in the financial books of record for construction. Find out the advantages of this method over the completed contract method of accounting in construction.
Prior to learning about this method, it is best for the reader to understand the completed contract method of accounting in construction.
This method of accounting is similar to the completed contract method except that the revenues and direct costs are recognized at the end of each accounting cycle. For most small contractors (building less than 20 houses per year), this is usually a monthly cycle. At the end of each month, each project is evaluated for the percentage of completion to that date. The change in percentage from