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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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definitions
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.
types of accounts
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
transaction processing
Transaction Processing
  • Transaction
  • Journal
  • Ledger
  • Trial Balance
  • Financial Statement
the basic equation
The Basic Equation

Assets = Liabilities + Owner’s Equity + Revenue – Expense

Assets =

Liabilities + O.E. + Revenue - Expense

+ = increase

- = decrease

draw account completed contract method
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
work in progress account completed contract method
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
percentage of completion
Percentage of Completion
  • Postings
    • Calculated Revenue to Date goes in the Revenue Account
    • Actual Cost to Date goes in the Cost of Construction Account