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.
Progress billings are a function of invoicing customers for work completed to date for construction projects. All billings and deposits for the respective projects are located in the current liabilities section of the the balance sheet.
Just like a tip of an iceberg, a progress billing for a construction project is an invoice for a small part of the overall contract value. It needs to be recorded correctly and presented to management in a way that is understandable and beneficial for making decisions. This article will introduce the concept and cover how progress billings are presented on the balance sheet.