Construction accounting is more complex than regular business accounting. In addition to traditional accounting activities like accounts payable, accounts receivable, and payroll transactions, additional actions are also required like retention, job costing, change orders, progress billings, customer deposits, and more.
Construction accounting cost specifications vary according to the uniqueness of the project. Cost primarily consists of material and labor. Other considerations are required on top of this, including architectural fees and consulting. Indirect costs like supervision, equipment rental, support, and insurance further complicate the construction project’s cost. However, administrative costs are not always charged unless the customer allows them.
What Construction Accounting Reports are Most Common?
For each transaction made on construction accounting, a process called the double-entry method is followed. This method requires two entries to be made on a ledger to record each transaction. As companies grow, this reporting gets confusing and tedious to follow manually, so accounting software is often required.
These specifics require more specialized reports like: