Self-Study
10
Overview
Accounting
There are no prerequisites.

Course Description

This course addresses every aspect of accounting for a construction business. The intent is to not only explain accounting concepts, but also provide examples and show how an accounting system can be constructed and operated. The course pays particular attention to unique aspects of construction accounting that are not encountered in other industries, including the job cost ledger, change orders, back charges, percentage of completion calculations, and the treatment of anticipated losses on contracts.



Instructor

Steven M. Bragg, CPA

Steven M. Bragg, CPA, is a full-time book and course author who has written more than 70 business books. He provides Western CPE with self-study courses in the areas of accounting and finance, with an emphasis on the practical application of accounting standards and management techniques. A sampling of his courses include the The New Controller Guidebook, The GAAP Guidebook, Accountants’ Guidebook, and Closing the Books: An Accountant’s Guide. He also manages the Accounting Best Practices podcast.

Steven has been the CFO or controller of both public and private companies and has been a consulting manager with Ernst & Young and an auditor with Deloitte & Touche. He holds an MBA from Babson College, a Master of Finance from Bentley College, and a BA from the University of Maine (summa cum laude).



Course Specifics

Accounting
Aug 16, 2018
There are no prerequisites.
SS1163461
223
None


Compliance Information

103220
Qualifies for CA Fraud: No


Learning Objectives

Upon successful completion of this course, participants will be able to:

Chapter 1

 

  • Recognize the nature of the construction contractor, noting the types of bonds that a contractor may be required to post.
  • Identify different types of construction contracts, noting the different types of clauses that may be added to a construction contract.
  • Note the various causes of contract claims.
  • Note the types of financial difficulties to which the construction industry is subjected.

 

Chapter 2

 

  • Identify the different types of ledgers used by a construction company.
  • Note the components of a work breakdown structure.
  • Recognize the types of accounts most likely to be designated as control accounts by a contractor.

 

Chapter 3

 

  • Recognize the different methods used to calculate the percentage of completion.
  • Identify the situations in which the completed contract method should be used.
  • Specify the circumstances under which the recovery of funds from a change order is probable.
  • Note the proper accounting for pre-contract costs.

 

Chapter 4

 

  • Note the various journal and general entries for construction transactions, including the normal account balances for the various account types.
  • Recognize when the straight-line rent concept should be applied.

 

Chapter 5

 

  • Recognize the components of financial statements for construction companies, noting the uses to which the accounting equation is put.
  • Identify the linkage between the balance sheet and the income statement.
  • Identify the impact of a long operating cycle.

 

Chapter 6

 

  • Recognize the components of fixed asset accounting for construction companies, citing the circumstances under which the useful life concept is employed.
  • Note the significance of the mid-month convention.
  • Identify the depreciation calculations for all depreciation methods.
  • Recognize the accounting for the disposition of a fixed asset.

 

Chapter 7

 

  • Note the methods available for giving meaning to a supplier identification number.
  • Recognize the purpose of the different copies of the Form 1099-MISC.
  • Note the purpose of the more important boxes listed on the Form 1099-MISC.

 

Chapter 8

 

  • Recognize the components of debt accounting, noting reasons for loan balance differences in the records of the lender and borrower.

 

Chapter 9

 

  • Cite the rule used for determining the amount of a loss contingency accrual.
  • Cite examples of contingencies, noting the proper disclosure for the different types of contingent losses.

 

Chapter 10

 

  • Identify the various types of leases, noting their characteristics, measurements, use, and accounting.
  • Recognize the lease rules related to short-term lease arrangements.

 

Chapter 11

 

  • Recognize the accounting requirements for payroll, noting the usage of Form W-4 and the impact of withholding allowances.
  • Identify the calculation used for the hourly rate plan.
  • Note how the wage bracket method is used.
  • Recognize the payment schedules for the different types of tax deposits.
  • Identify the tax calculation for the FUTA tax.

 

Chapter 12

 

  • Recognize the accounting requirements for investments in joint ventures, noting how the equity method is calculated.

 

Chapter 13

 

  • Identify IRS tax requirements specific to the construction industry, citing types and examples of costs and accrual methods.
  • Note the IRS designation for a multi-year contract.
  • Recognize the circumstances under which the IRS allows the cash method to be used.
  • Define the circumstances under which the IRS allows a business to be classified as a small contractor.

 

Chapter 14

 

  • Identify the situations in which a change log can be most profitably used.
  • Recognize the controls that apply to fixed fee and cost plus contracts.

 

Chapter 15

 

  • Cite the components of earned value management.
  • Note the calculation components of the cost performance index.

 

Chapter 16

 

  • Note the advantages and disadvantages of the various types of organizational structures, as well as the requirements for the formation of each one.

 



Table of Contents

Chapter 1 – Overview of the Construction Industry

Learning Objectives

Introduction

Nature of the Construction Contractor

Bonding Requirements

The Bidding and Construction Process

Types of Construction Contracts

Fixed Fee Contract

Cost Plus Contract

Unit-Price Contract

Construction Contract Modifiers

Contract Changes

Construction Industry Failure Issues

Summary

Chapter 1 – Review Questions

Chapter 2 – The Construction Accounting System

Learning Objectives

Introduction

Nature of a Construction Accounting System

The Chart of Accounts

The General Ledger

The Work Breakdown Structure

The Job Cost Ledger

Job Cost Ledger Posting

The Equipment Ledger

Summary

Chapter 2 – Review Questions

Chapter 3 – Construction-Specific Accounting

Learning Objectives

Introduction

Accounting Standard-Setting Organizations

Types of Accounting Methodologies

Cash Method of Accounting

Accrual Method of Accounting

Percentage of Completion Method

Completed Contract Method

Summary of Accounting Methodologies

Unpriced Change Orders

Contract Claims

Contract Back Charges

Costs Assigned to Jobs

Labor Burden

Equipment Cost Allocation

Summary

Chapter 3 – Review Questions

Chapter 4 – Construction Transactions

Learning Objectives

Introduction

Double Entry Accounting

Journal Entries

General Entries

Office Rent Expense

Other General Expenses

Inventory Purchases

Supplier Invoice Payments

Client Cash Receipts

Loan Acquisition

Loan Payments

Sale of Stock

Entries Related to the Percentage of Completion

Anticipated Losses on Contracts

Job Costing Entries

Invoice Charged to Job

Labor Charged to a Job

Inventory Charged to a Job

Client Billings

Equipment Entries

Equipment Rentals

Equipment Repairs

Equipment Charged to a Job

Summary

Chapter 4 – Review Questions

Chapter 5 – Construction Financial Statements

Learning Objectives

Introduction

The Balance Sheet

The Income Statement

The Statement of Cash Flows

Financial Statement Disclosures

Reporting Options

Summary

Chapter 5 – Review Questions

Chapter 6 – Fixed Asset Accounting

Learning Objectives

Introduction

What are Fixed Assets?

Fixed Asset Classifications

Accounting for Fixed Assets

The Capitalization Limit

The Base Unit

The Initial Measurement of a Fixed Asset

The Purpose of Depreciation

Depreciation Concepts

Accelerated Depreciation

Sum-of-the-Years’ Digits Method

Double-Declining Balance Method

Straight-Line Method

Units of Activity Method

MACRS Depreciation

The Depreciation of Land

The Depreciation of Land Improvements

Depreciation Accounting Entries

Accumulated Depreciation

Asset Derecognition

Abandoned and Idle Assets

Asset Disposal Accounting

Summary

Chapter 6 – Review Questions

Chapter 7 – Payables Accounting

Learning Objectives

Introduction

Accounting for Accounts Payable

Early Payment Discounts

The Vendor Master File

Vendor Master File Usage

Supplier Naming Conventions

The Payables Filing System

Government Reporting

The Form 1099-MISC

Treatment of Incorrect Filings

The Form W-9

Summary

Chapter 7 – Review Questions

Chapter 8 – Debt Accounting

Learning Objectives

Introduction

Basic Debt Accounting

The Amortization Schedule

Reconciling the Debt Account

Participating Mortgage Loans

Summary

Chapter 8 – Review Questions

Chapter 9 – Contingencies

Learning Objectives

Introduction

Loss Contingencies

Gain Contingencies

Contingency Disclosures

Summary

Chapter 9 – Review Questions

Chapter 10 – Lease Accounting

Learning Objectives

Introduction

The Nature of a Lease

Lease Types

Initial Lease Measurement

Short-Term Leases

Finance Leases

Operating Leases

Derecognition

Summary

Chapter 10 – Review Questions

Chapter 11 – Payroll Accounting

Learning Objectives

Introduction

Employee Time Tracking

Gross Pay Calculations

Hourly Rate Plan

Overtime

Types of Payroll Taxes

Social Security Tax

Medicare Tax

Unemployment Taxes

Income Tax Withholdings

Benefits and Other Deductions

Net Pay

Remitting Payroll Taxes

Types of Tax Deposit Schedules

Monthly Deposit Schedule

Semiweekly Deposit Schedule

Federal Unemployment Deposit Schedule

Remittance Method

The Form 941 Quarterly Federal Tax Return

State Tax Remittances

Payments to Employees

The Payroll Register

Form W-2

Payroll Journal Entries

Types of Payroll Journal Entries

Primary Payroll Journal Entry

Accrued Wages

Manual Paycheck Entry

Employee Advances

Accrued Vacation Pay

Tax Deposits

Summary

Chapter 11 – Review Questions

Chapter 12 – Investments in Construction Joint Ventures

Learning Objectives

Introduction

The Equity Method

The Cost Method

Consolidations

Sales to a Joint Venture

Summary

Chapter 12 – Review Questions

Chapter 13 – Construction Tax Issues

Learning Objectives

Introduction

The Accounting Method to Use for Tax Reporting

Application of the Cash Method

Application of the Accrual Method

Types of Costs

Types of Accrual Methods

Accrual Method

Percentage of Completion Method

Exempt Percentage of Completion Method

Completed Contract Method

Summary

Chapter 13 – Review Questions

Chapter 14 – Construction Accounting Controls

Learning Objectives

Introduction

Segregation of Duties

Asset Tracking

Access to Data

Controls for Estimates and Bids

Controls for Cost Plus Pricing Arrangements

Controls for Fixed Fee Pricing Arrangements

Subcontractor Controls

Materials Controls

Labor Controls

Equipment Controls

Job Closure Controls

Percentage of Completion Controls

Change Order Controls

Billing Controls

Budget Controls

Financing Controls

General and Administrative Controls

Construction Fraud

Summary

Chapter 14 – Review Questions

Chapter 15 – Job Analysis

Learning Objectives

Introduction

Projected Cost and Variance Analysis

Adjusting for the Timing of Billings

Earned Value Management

Schedule Performance Index

Cost Performance Index

Summary

Chapter 15 – Review Questions

Chapter 16 – Business Structures

Learning Objectives

Introduction

Sole Proprietorship

Partnership

Corporation

C Corporation

S Corporation

Limited Liability Company

Summary

Chapter 16 – Review Questions

Review Question Answers and Rationales

Glossary

Index

Qualified Assessment

Answer Sheet

Course Evaluation 



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