Construction Accounting is one of the various forms of project accounting that is specifically used in construction projects. It’s a form of bookkeeping that helps contractors in the financial management of the whole construction project. Businesswire reported that the massive investment of the U.S. in the networking industry is giving various opportunities to the construction industry. It is said that the construction industry could reach up to US$ 1,804.8 billion by 2023. To avoid the arising of financial problems, what you need to do is create a comprehensive construction accounting document. Here’s how.
1. Classify What Document You Need
What accounting document do you exactly need? Is it a tracking sheet, statement of final account, or a monthly finance tracking document? How do you want to present the data? Is it through excel or chart? Be specific.
2. Record Transactions Using Journal Entry
After you’ve classified the type of construction accounting you need, you start recording your transactions using your journal entry. This is to ensure that you enter the correct information to your ledger.
3. Record Information to the Ledger
From your journal ledger, it’s time to post your transaction records to your company’s ledger. After that, you can start calculating the trial balances.
4. Make Adjustment to the Entries
Since it’s a work in progress, you can adjust the items in your general ledger for some errors or corrections. And after, you can already start preparing for Adjusted Entries.
5. Create Your Financial Statement
Finally, after some analysis and revenue recognition, you already have a financial statement like an invoice that you can use for various construction accounting activities.