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Construction Accounting Transactions

Construction Accounting Transactions. CON 389. Definitions. Journal : A chronological listing of transactions as they occur on a day-by-day basis. Double-Entry Bookkeeping : Each transaction leads to two entries. A debit and credit.

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Construction Accounting Transactions

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  1. Construction Accounting Transactions CON 389

  2. Definitions • Journal : A chronological listing of transactions as they occur on a day-by-day basis. • Double-Entry Bookkeeping : Each transaction leads to two entries. A debit and credit. • Ledger : Transactions posted in Accounts. Chart of Accounts is the Ledger.

  3. Types of Accounts • An account is used to keep track of the transactions by some source of financial activity. • Types of Accounts • Assets • Liabilities • Net Worth • Revenue • Expenses • Refer to Your Chart of Accounts

  4. Transaction Processing • Transaction • Journal • Ledger • Trial Balance • Financial Statement

  5. The Basic Equation Assets = Liabilities + Owner’s Equity + Revenue – Expense Assets = Liabilities + O.E. + Revenue - Expense + = increase - = decrease

  6. Draw AccountCompleted Contract Method • Used for cash inflow • The draw account is a current liability • At the completion of the job • Prior billings posted in the draw account are moved to the Revenue account

  7. Work in Progress AccountCompleted Contract Method • Work in Progress (WIP) account is categorized as a current asset • At job completion all of the costs accumulated in the WIP account are moved to the Cost of Construction account

  8. Percentage of Completion • Postings • Calculated Revenue to Date goes in the Revenue Account • Actual Cost to Date goes in the Cost of Construction Account

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