Tag: Construction Accounting
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Construction Accounting
Construction accounting exists to provide two key financial points of information to contractors and the management team of a construction company. The first and most important financial point is field production profit. This particular profit measurement is commonly referred to as job profits. It is essential contract revenue less direct (hard) costs of construction. The…
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Implement Job Cost Accounting in Construction
Financial success in construction is tied directly to job costing. Without job cost accounting, financial wellness is likely a product of coincidence than authority within this industry. Implementing job costing in construction is the absolute best financial control a contractor can do to ensure success. Tie cost accounting to the estimating process, and prosperity is…
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Estimating in Construction – Part II (Financial Outcomes Evaluation)
Estimating in construction is a tool to guide the construction management team towards improved profitability (an internal control system).
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Estimating in Construction – Part 1 (Introduction)
Estimating in construction is the best internal control tool to maximize profit. Estimates act similar to a dashboard of critical information.
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Job Costing
Job costing is one of the forms of cost accounting. It is used in conjunction with financial accounting to alert management about profitability with production.
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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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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 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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Job Cost Reports – Balance Sheet Set
Construction accounting uses job cost reports to inform management of progress and existing issues with projects. There are several different sets of reports. The balance sheet set functions as an overall financial picture for the company.
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Construction Accounting Terminology
In construction accounting, accountants and bookkeepers use certain terms and there are distinct meanings associated with these terms. This article is designed to introduce beginner accountants and contractors to these terms from the perspective of financial reporting.