QuickBooks in Construction Accounting – Transfer Work in Process to Cost of Goods Sold
Minimum Bottom Line Profit Should Average 9.4%!
For Trades & Subcontractors, at Least 11%
After Income Taxes Are Paid!
I want to thank two readers for asking about this issue. While reading Using QuickBooks in Construction Accounting they noticed that I failed to explain how to transfer the costs of construction to the profit and loss statement. In effect, how do you move these individual costs over to the costs of goods sold section of the profit and loss statement. Thanks John and Clarissa for the request.
Well, the first article related to using QuickBooks in construction accounting is pretty lengthy and covers the accounting perspective from the job costing viewpoint. The transfer of information is an accounting perspective and is designed to assist the owner of the construction company in analyzing profitability for the company for all combined projects. Thus, this article will cover some issues from the first article, then the financial accounting perspective and finally the step by step process to transfer the costs to the correct lines of information in the cost of goods sold section in the P&L statement.
Please understand, this is a long article to help you understand your accounting information. I tell the readers of my articles that I write to educate and assist in getting results from accounting, if you are looking for a quick solution, well, you will not find it here. This is the real world, and business activity is complex and it is important to get it right. There’s an old saying in technology: “Good data in means the maximum opportunity for good data out”, I don’t know who created the phrase, but I like the thought. Well, accounting software relies on the same principle, get the data into the system in a great format and you’ll have the best chance of getting good information out to help you make great decisions.
Review of Construction Accounting
The goal of construction accounting is generating a feedback loop for an owner or project manager to understand performance issues, possible estimating issues, or areas for improvement. The feedback loop is
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