more construction accounting

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1、CHAPTER4MoreConstructionAccountingInthischapteryouwillincreaseyourunderstandingofconstructionaccountingsys-tems.Youwilllearntotrackcommittedcostsoutsidetheaccountingsystemintheeventyourcompany’saccountingsystemdoesnottrackcommittedcosts,whichwillalsohelpyouunderstandhowaccountingsystemstrackcomm

2、ittedcosts.Youwilllearntousecommittedcoststoprojecttheestimatedcostandprofitatcompletionforprojects.Youwillalsolearntocalculateover-andunderbillings.Finally,youwilllearnabouttheinternalcontrolsthatneedtobesetuptoprotectyourfinancialre-sourcesandwhattolookforincomputerizedconstructionaccountingsy

3、stems.Whatfollowsareanumberoftopicsthatwillroundoutyourunderstandingofconstructionaccounting.Let’sbeginbylookingatcommittedcostsandestimatedcostatcompletion.COMMITTEDCOSTSANDESTIMATEDCOSTATCOMPLETIONTogetamoreaccuratepictureofaconstructionproject’sfinancialstatus,un-billedcommittedcostsmustbeinc

4、ludedwiththeinvoicedcostsinthejobcostsledgerandtheestimatedcostatcompletionneedstobeprojected.Committedcostsarethosecoststhatthecompanyhascommittedtopay.Thisoccurswhenthecompanyissuesapurchaseorderorsignsasubcontractforaknownamount.Oftenacompanyhiressubcontractorsforamajorportionofaproject.Whent

5、hesubcontractorsarehiredforafixedprice,thecosttocom-pletethesubcontractedworkisknown—barringanychangeorders—farinad-vanceoftheworkbeingcompletedandthecompanyreceivingabillforthework.Someaccountingsystemsallowyoutotrackcommittedcostsinthejobcostledger,whereasothersdonot.Onceabillisreceivedforacom

6、mittedcost,itisincludedwiththeinvoicedcostsandtrackedonthejobcostledger.Ifacom-pany’saccountingsystemdoesnottrackcommittedcosts,unbilledcommittedcostsmustbemanuallycombinedwiththejobcostledgertogetanaccurate8182CHAPTER4pictureoftheproject’sfinancialstatus.Inthissectionwelookathowtouseaspreadshee

7、ttocombineunbilledcommittedcostswiththecostsfromthejobcostledger.Thiswillhelpyouunderstandhowtoincludecommittedcostsandhowanaccountingpackagehandlescommittedcosts,sincetheyhandletheminasimilarmanner.Wealsolookatprojectingthe