Accounting & Financial Management for Builders, Remodelers & Developers 5th Edition

Accounting & Financial Management for Builders, Remodelers & Developers 5th Edition: Overview

Accounting & Financial Management
for Residential Construction - Fifth Edition
Emma Shinn

Take control of your finances with Accounting and Financial Management. This solid resource for builders, remodelers, developers, and contractors provides detailed information on how an accounting system operates and the basic principles for processing financial data. This fifth edition includes the updated NAHB Chart of Accounts and explains

how technology facilitates procedures for such items as accounts payable, change orders, and payroll and how it impacts processing systems
the impact of additional management reports and how they can enhance and facilitate a manager's job
the key measurements that residential construction professionals should track
the integration of job cost accounting with estimating, purchasing, and scheduling
the profit center concept for multiple-project companies and its reporting requirements

This book is a part of the core curriculum for several of our construction management programs. It provides essential information to take control of your finances.
Elizabeth Sugg, Curriculum Manager, Cengage Learning, Clifton Park, NY

Emma Shinn specializes in accounting and financial management for the home building industry. Her background Includes all aspects of the building process including planning, design, supervision, sales, and administration of Single-family projects.

Accounting & Financial Management for Builders, Remodelers & Developers 5th Edition: Contents

Forward, vii

Introduction, 1

Designing the System, 3
Choosing an Accountant, 4: The Bookkeeper, 5; The Accountant, 5
The Certified Public Accountant, 5
CPA Firms and Level of Services Available 6: Audits, 6; Reviews, 6; Compilations, 6

Accounting Systems, 7: Financial Accounting System
Managerial Accounting System, 7: Accounting Equation, 9; Assets, 9; Equities, 9; Debits and Credits, 9
Net Income, 10: Revenues, 10; Cost of Sales, 10; Operating Expenses, 11
Financial Statement, 12: Income Statement, 12; Balance Sheet, 12
Users of Financial Information, 12
Reporting Requirements, 14
Audit Trail, 14

Accounting Methods, 15: Cash or Accrual, 15; Completed Contract or Percentage of Completion, 16; Direct Costing or Absorption Costing, 17
Terms, 17: Revenues Versus Cash, 17; Expenses Versus Cash Disbursements, 17; Profit Versus Cash Balance, 17; Expenses Versus Costs, 17; Indirect Construction Cost Versus, 17; Overhead, 17
Fixed Versus Variable Costs, 17

Structure, 19
Numerical Coding System, 19
Customizing the Chart of Accounts, 20

Flow of Information, 21: Journals, 21; General journal, 21; Special journals, 22
Ledgers, 22: General Ledger, 24; Subsidiary Ledgers, 24
Processing of Data, 25: Journalizing, 25; Posting, 25; Adjusting Entries, 25; Closing Entries, 25
Office Filing Procedures, 25

Objectives and Requirements, 27: Authorization, 27; Record Keeping, 27; Custodianship, 27; Policies and Procedures, 27
Cash Management and Control, 28: Checking Account Procedures, 28; Cash Balance Control, 28
Cash Receipts and Disbursements, 30: Petty Cash, 30
Loan Administration, 31: Delegate Responsibility, 31; Learn and Follow Procedures, 31
Account for the Funds, 31
Estimating and Purchasing, 32
Coordination and Accounting System

Balance Sheets and Income Statements Balance Sheet, 33: Balance Sheet, 33; Assets, 35; Liabilities, 35; Owners' Equity, 35
Income Statement, 35: Revenues, 35; Cost of Sales, 36; Operating Expenses, 37
Other Income and Expenses, 38

Gross Profit Analysis, 39
Cash Flow Analysis, 40
Financial Ratio Analysis, 42: Liquidity Ratios, 42; Profitability Ratios, 42; Leverage Ratios, 43; Return on Investment Ratios, 43
Ways to Improve Ratios, 44: Return on Sales, 44; Asset Turnover, 44; Leverage, 45
Breakeven Analysis, 45

Design the System, 47
Establish the Job Cost Format, 48: NAHB-McBee One-Write System, 48; Multicolumn Job Cost System, 50; Code of Invoices, 50; Improve Control with a Purchase Order System , 50; Prepare the Job Cost Reports, 50

In-House Computer, 53
Manual Systems, 53
One-Write Systems, 53
Computerizing Your Accounting Functions, 54: Accounting Applications, 54; Service Bureaus, 54; Other Applications, 55
NAHB Software Review Program, 56

General Accounting, 57
Chart of Accounts, 57
Profit Centers, 58
Job Costing, 58
Indirect Construction Cost, 58
Marketing and Financing Expenses, 59
General and Administrative Expenses, 59
Financial Analysis, 59

General Accounting, 61
Chart of Accounts, 62
Job Costing, 62: Development Cost, 62; Indirect Costs, 63; Financing Costs, 63; Lot Cost Allocation, 63; Lot Pricing, 64
Financial Analysis, 64

General Accounting, 65
Chart of Accounts, 66
Credit Approvals, 66
Job Costing, 67
Completed Contracts, 67

Elements of a Budget, 69: Sales Plan, 69; Production Plan, 71; Land and Land Development
Costs, 71: Direct Construction
Costs, 71: Indirect Construction
Costs, 71: Cost Estimate Summary, 71; Cost of Sales Plan and Gross Profit Plan, 71; Operating Expenses Plan, 71; Profit Plan, 72; Cash Flow Report, 72
Reports, 77

Land Acquisition and Development Treatments, 79: Preacquisition Costs, 79; Acquisition Costs, 79; Land Development Costs, 79
Accounting for Amenities, 80: Carrying Costs, 80; Direct Construction Costs, 80; Indirect Construction Costs, 81; Consistency, 83
Revenue Recognition, 83: Full Accrual Method, 83; Percentage-of-Completion Method, 84; Installment Sales Method, 85; Cost Recovery Method, 85; Deposit Method, 85
Other Sources of Information, 85

Appendixes

Outline of the NAHB Chart of Accounts, 89
Complete NAHB Chart of Accounts, 93
Basic Accounts For Small-Volume Businesses, 105
Direct Construction Costs Subsidiary Ledger, 109
Indirect Construction Costs Subsidiary Ledger, 113
Land and Land Development Costs Subsidiary Ledger, 115
NAHB Approved Accounting Software, 117

Notes, 119

Figures

Chapter 2. Basics of Accounting

2-1. Nature, Structure, and Output of an Accounting System, 7

2-2. Flow of Data Through the System, 8

2-3. Flow of Costs Through the System, 13

Chapter 5. Bookkeeping Procedures

5-1. General journal Format, 21

5-2. Sample Payroll Journal, 22

5-3. Levels of Recording, 23

5-4. General journal Format, 24

5-5. Subsidiary Ledger Format, 24

5-6. Job Cost Subsidiary Format, 24

Chapter 6. Internal Control

6-1. Bank Reconciliation Statement, 30

Chapter 7. Financial Reports

7-1. Balance Sheet, 34

7-2. Income Statement, 35

Chapter 8. Financial Analysis

8-1. Cash Flow Report, 41

Chapter 9. Overview of Job Cost Accounting

9-1. Job Cost Card, 49

Chapter 10. Processing Systems

10-1. NAHB Approved Software, 56

14. Financial Planning

14-1. Planning Information Flow, 69

14-2. Schedule I, Sales Plan, 70

14-3. Schedule II, Land and Land Development Plan, 72

14-4. Schedule III, Direct Construction Costs, 73

14-5. Schedule IV, Indirect Construction Cost Estimate, 74

14-6. Schedule V, Cost Estimate Summary, 74

14-7. Schedule VI, Cost of Sales Plan, 75

14-8. Schedule VII, Gross Profit Plan, 75

14-9. Schedule VIII, Operating Expenses Plan, 76

14-10. Schedule IX, Profit Plan, 77

14-11. Cash Flow Report, 78

15. Technical Aspects of Accounting

15-1. Minimum Initial Investment Chart, 84

Accounting & Financial Management for Builders, Remodelers & Developers 5th Edition: Introduction

Introduction

Every company should produce monthly financial statements and other reports for management use. Just as any home or building must rest on a secure and solid foundation, an understanding of accounting should be the firm foundation upon which a company rests.

This revised and expanded fifth edition of Accounting and Financial Management for Residential Construction assumes the reader has no previous knowledge of accounting. It uses straightforward and easy-to-comprehend explanations and illustrations to help builders, remodelers, and developers understand accounting and bookkeeping terminology and procedures.

Emma Shinn will lead the reader through the process in a methodical manner, building concept upon concept so that even the most complex accounting functions can be easily understood.

This book can be used by any type of builder (single-family, multifamily, or commercial), remodeler, and developer. It includes the complete, updated NAHB Chart of Accounts (to be adapted to your business) and the job cost control subsidiary ledger accounts for direct, indirect, and land development costs.

This fifth edition of Accounting and Financial Management

presents an overview of accounting and how an accounting system operates
offers guidelines and a general structure for designing an accounting system
presents general concepts and principles of financial planning and analysis
details how to integrate job cost accounting with estimating, purchasing, and scheduling
explains how technology facilitates accounting processes
explains how owners and managers can use financial reporting to enhance and improve their companies
provides special tips for multiple-project builders (Chapter 11), developers (Chapter 12), and remodelers (Chapter 13) to use and benefit from the profit center concept

Although the book begins with the basics, readers can go as deeply as they wish. In fact, some builders, remodelers, and developers give the book to their certified public accountants (CPAs) with their records at year's end to facilitate the CPA's understanding of the unique aspects of residential construction and remodeling.

Moreover, using financial reporting systems helps builders, remodelers, and developers determine their financial position at any time; compare current and historical performance; and benchmark their performance against other builders, remodelers, developers; and even the industry itself.

So, roll up your sleeves, grab your financial data, a cup of coffee, and get started.

how technology facilitates procedures for such items as accounts payable, change orders, and payroll and how it impacts processing systems
the impact of additional management reports and how they can enhance and facilitate a manager's job
the key measurements that residential construction professionals should track
the integration of job cost accounting with estimating, purchasing, and scheduling
the profit center concept for multiple-project companies and its reporting requirements

We We also carry a complete selection of Estimating, Takeoff & Job Costing software programs for Home Builders, Contractors & Facilities Managers.

Find out more...

Related Titles & References
Estimating & Takeoff

Please note: Many of these titles include a CD-ROM

Accounting & Financial Management for Builders, Remodelers & Developers 5th Edition

Accounting & Financial Management for Builders, Remodelers & Developers 5th Edition

Accounting & Financial Management for Builders, Remodelers & Developers 5th Edition: Overview

Accounting & Financial Management for Builders, Remodelers & Developers 5th Edition: Contents

Accounting & Financial Management for Builders, Remodelers & Developers 5th Edition: Introduction

Related Titles & References Estimating & Takeoff

Related Titles & References
Estimating & Takeoff