Selecting Online Accounting Services For Your Business

Posted on July 8, 2012 by admin

“Balanced budget requirements seem more likely to produce accounting ingenuity than genuinely balanced budgets.” Thomas Sowell

Financial resources precede the idea of initiating business. Ideas remain ideas until they are implemented. For the implementation of business decisions, the financial resources are to be allocated where needed. If a person does not have enough financial resources he cannot implement a plan or decision of a business. I think that explains the important of finance for a business. While initiating a new business following three need to be planned:

Budget and accounts planning
proper functioning
Scrutinizing and examining the function.

If these steps are not followed it can badly affect the sustenance of a company. A minor mistake can lead to complete failure. This is why proper planning is necessary for an accounting system. Manually handled records tell us that it there are a lot of expected errors. New businesses specially the ones that are on a small scale cannot afford to hire an accountant for managing the books of accounts. Even the accounting and tax consultants in the market are available to help but they charge quite high. Therefore people prefer to take the help of online accounting services that charge them low and they are more reliable as they offer an error free functioning and management of books of accounts. This is what an online accounting service can do for you:

Planning accounting resources in a way that output can be maximized.
It is an error free management of accounts.
It saves the time of the company that would be wasted in manual preparation of accounts.
It is a cost effective method of management of accounts.
It is a convenient way to assistance on functioning of accounts.
It is an easy way to monitor the flow of finances.
It gives you a 100% accuracy rate. This is not possible in manual handling of book of accounts.
It helps you in day to day accounting transaction.
It helps in strategic financial planning.
It is easily accessible.
It does not need and detailed technological knowledge.
It not only saves capital but also saves man power and time resources.
Online accounting services offer you a support round the clock.
Online accounting services help in filing for tax returns.
You can save a lot on tax preparation with the help of online tax accountants.
By the time, money and human resources that you save you can now increase your productivity.

Most of the small and medium sized businesses think that they can save a lot if they do it themselves but when it comes to legal and IRS filling they are not aware of the law. So they end up in paying more then they would pay to online accounting services – hiring an accountant is not cost effective for these businesses; specially the ones who are new in the market. As they can’t and won’t spend an extra penny they have. They should initiate the business in a properly planed way to get desired result. For this purpose we have already discussed the importance of planning financial resources and no one can do it better then a qualified, experienced professional.

What Exactly is Accounting And Rules of Accounting

Posted on July 7, 2012 by admin

Any individual who’s worked in an office at some point or one more has had to go to accounting. They are the people who pay and mail out the bills that keep the company running. They do a lot a lot more than that, though. Often referred to as “bean counters” they also keep their eye on profits, expenses and losses. Unless you’re running your personal enterprise and acting as your personal accountant, you’d have no way of understanding just how profitable - or not - your enterprise is without having some form of accounting. No matter what company you’re in, even if all you do is balance a checkbook, that’s still accounting. It is part of even a kid’s life. Saving an allowance, spending it all at as soon as - these are accounting principles.

Accounting is fundamentally details, and this information is published periodically in business as a profit and loss statement, or an income statement. Accounting is related with measuring and arraying economic information and communicating the outcomes of this approach to interested parties. What are some other companies exactly where accounting is critical? Properly, farmers need to follow cautious accounting procedures. Numerous of them run their farms year to year by taking loans to plant the crops. If it’s a superb year, a profitable one, then they are able to pay off their loan; if not, they may well need to carry the loan more than, and accrue much more interest charges.

Each enterprise and every individual needs to have some type of accounting technique in their lives. Otherwise, the finances can get away from them, they don’t know what they’ve spent, or whether or not they are able to expect a profit or a loss from their business. Staying on leading of accounting, regardless of whether it is for a multi-billion dollar organization or for a personal checking account is a necessary activity on a everyday basis if you are intelligent. Not doing so could mean whatever from a returned check or submitting a loss to a firm’s shareholders. Both circumstances may be similarly devastating.

Simple Accounting Rules

For example, a company’s accountants regularly look at the profit and loss for a month, a quarter or a fiscal year and submit these outcomes in a declaration of profit and loss that’s called an income statement. These statements contain elements including accounts receivable (what’s owed to the organization) and accounts payable (what the business owes). It may also get fairly difficult with subjects like retained earnings and accelerated depreciation. This in the higher stages of accounting and inside the corporation. A lot of accounting though, is also concerned with standard bookkeeping. This is the procedure that records every single transaction; each bill paid, every dime owed, every dollar and cent invested and accumulated.

But the founders of the organization, which can be individual people or large number of shareholders, are most concerned with the summaries of those transactions, contained within the economic statement. The financial statement summarizes a company’s assets. A value of an asset is what it expense when it was initial acquired. The monetary statement also records what the sources with the assets were. Some assets are within the type of loans that need to be returned. Income is also an asset of the enterprise.

Home Health Care Accounting Is Challenging

Posted on May 11, 2012 by admin

Home Health Care Accounting Is challenging, not because it’s different from other accounting practices, because of the level of detail your financial statements must have in order to properly file your Home Health Care Agency Medicare Cost Reports. Our Home Health Care Accountants specialize in the field of home health care accounting, Medicare Cost Reports and other regulatory requirements.

The narrower aim of home health care accounting and our Home Health Care Accountants is to assemble and structure information on the health care system that is needed to hold the providers of health care formally accountable for the cost and the quality of the products and services they deliver. Our Home Health Care Accountants seek to measure the financial outcome of the myriad decisions made in a business during a quarter or full year.

The fundamental statement is the company’s statement of financial position. It presents dollar estimates of the real, financial and intangible assets to which the company has legal title, all of the debt it owes and the difference between total assets and total debt, which is the company’s net worth, also called owners’ equity.

Our Home Health Care Accountants understand the reporting requirements of a Home Health Care Agency via the Medicare Cost Reports. A typical business can group all its sub-contractors into a single line item on its financial statements. Home health care accounting is much different. You must track and break out the individual disciplines of the sub-contractors on your financials (i.e. PT, OT, ST, HHA etc). If these are grouped together, preparing your Medicare Cost Report will be a nightmare. Furthermore, the corporate tax returns must match the Medicare Cost Reports. Which means that if you’re chart of accounts is not sufficiently detailed the preparation of both your Medicare Cost Reports and corporate tax returns will be impossible.

A rejection of your Medicare Cost Report by Palmetto GBA could mean your payments from Medicare will be suspended.

Our Home Health Care Accountants specialize in home health care accounting. Please call us for a free initial consultation and assessment of your accounting records to ensure a smooth year end and subsequent filing of your tax returns and Medicare Cost Reports.

Online Accounting Services And How Small Businesses Benefit From Them

Posted on May 8, 2012 by admin

If you manage a small business then you probably find it hard to perform bookkeeping. Online accounting services the best solution into easier bookkeeping. This is an online system that allows you to take control of all your accounts online. It is provided by accounting outsourcing firms and it gives you much time to handle other aspects of your business rather than bookkeeping, which often takes many hours. It is a convenient way to handle your management tasks without wasting a lot of time.

Online accounting services are efficient in helping you store all your accounting information on a web based system. With the allowance to access it more frequently and from anywhere it is very convenient. Besides, these services will help you cut down on the extra payment you make to a book keeper who physically comes into your premises. As long as you have an internet connection, you can always access your books.

One benefit with the online accounting services is that they avail a system where the client will have very little data to enter. Mostly the clients will use the QuickBooks software, which is simple to learn and use. Some outsourcing companies will even provide training software to their clients and they help them ease their bookkeeping tasks. The online accounting firms will help their clients ease the making of a business activity statement and handle the payroll.

Using the online accounting services will not only help you save some hours, which were previously directed to bookkeeping but you can also be assured of competence. Your records will be handled by an experienced professional eliminating any worries of making mistakes when you take the task yourself. You should remember that the professionals have the bookkeeping task as their profession and do not feel oppressed by it.

There is dire need to outsource simple tasks that do not matter much to the business such as cleaning, bookkeeping and marketing so that you are able to focus on the core matters. The online accounting services will be of great aid to you if you are planning to outsource the bookkeeping task. They will give you ample time to concentrate on other factors such as customer service and products, which are more important to the success of your business.

It is mandatory for all businesses to keep records of their transactions so that it is easy to track the movement of funds. Traditionally, the business owner would usually employ accountants whose profession is based on keeping accurate records. However, with invent of the internet it is now possible to have bookkeeping online through the online accounting services. One of the greatest benefits you will reap as a business owner is the reduced cost at which you get the service.

The Online Accounting Services also include financial analysis. Your business can keep abreast with details of its marketing efforts by having this service. It is useful where you want to lay out new strategies since it points out to your faults. Your accounting records can be presented in graphs and tables allowing you to easily see what needs to be done to make your business more efficient.

Accounting Forms Meaning And Essence

Posted on March 14, 2012 by admin

Accounting forms are a combination of several accounting records of various business transactions. Proper accounting system is extremely important for any business organization whether it’s large corporate or small partnership. Accounting includes certain forms like Journal, ledger accounts, trial balance, spreadsheet records and records of various expenses and balance sheet. Actual financial condition of any business is shown with details provided by these accounting forms. Accounting forms are required to keep accounting system error free. It is very important for a businessman to know the actual net profit and financial condition of the business and this is only possible if accounting forms are accurate.

Types of the Accounting forms

These accounting forms contain detailed record of various financial activities. It contains details of all the transactions done in a financial year. Following are some accounting forms:

Cash Log Form: Keeping accurate record of the cash is most important for any business organization. These forms are kept to know the amount of cash received and paid. Since cash is required for every financial activity, cash log forms are very useful.
Journal Forms: Journal statements are prepared in order to know the relative details of financial transactions. These are known as journal forms.
Business Invoice Forms: Another kind of accounting form is business invoice form. These forms are given to almost every party a business deal with. Let it be customers, vendors, creditor even debtors.
Purchase and Sales order forms: This is a special kind of accounting form, prepared to track down the details of purchase orders made by the business to other parties. Whereas sales order forms are required to keep the records of sales made by the business. These forms are important since it is the basis of business. Business is all about purchase and sales.

Conclusion of Accounting Forms

Some large organizations where quantity of inventory used is huge maintain inventory turnover ratio forms. These forms are helpful to know the exact cost of inventory. Ever since the invention of double entry system need of documentation has immerged and this leads to keeping records of accounting forms. Accounting forms are so vital for any business organization. Accurate accounting forms are the proof of true financial condition of business. After the industrial development with the ever increasing size of business crossing the boundaries of countries keeping record of every aspect has become a necessity and accounting forms let the businessman track accurate details of financial condition.

Accounting Services Singapore

Posted on February 7, 2012 by admin

How Different is Accounting from Bookkeeping Services

Bookkeeping may be the recording of financial transactions. Transactions consist of sales, purchases, income, and payments by an individual or organization. Bookkeeping is generally performed by a bookkeeper. Bookkeeping ought to not be confused with accounting. The accounting process is generally performed by an accountant. The accountant creates reports from the recorded monetary transactions recorded by the bookkeeper and files forms with government agencies. There are some common techniques of bookkeeping such as the Single-entry bookkeeping program and also the Double-entry bookkeeping system. But while these systems may be seen as “real” bookkeeping, any process that involves the recording of monetary transactions is really a bookkeeping procedure.

A bookkeeper (or book-keeper), also recognized as an accounting clerk or accounting technician, is a individual who records the day-to-day financial transactions of an organization. A bookkeeper is generally responsible for writing the “daybooks.” The daybooks consist of purchase, sales, receipts, and payments. The bookkeeper is responsible for ensuring all transactions are recorded within the correct daybook, suppliers ledger, customer ledger, and general ledger. The bookkeeper brings the books towards the trial balance stage. An accountant may prepare the earnings statement and stability sheet using the trial stability and ledgers prepared by the bookkeeper

Bookkeeping systems

Two common bookkeeping techniques utilized by businesses and other organizations are the single-entry bookkeeping system and the double-entry bookkeeping program. Single-entry bookkeeping uses only earnings and expense accounts, recorded primarily in a revenue and expense journal. Single-entry bookkeeping is adequate for numerous small businesses. Double-entry bookkeeping requires posting (recording) each transaction twice, using debits and credits.

Single-entry system

The primary bookkeeping report in single-entry bookkeeping may be the cash guide, that is similar to a checking (chequing) account register but allocates the earnings and expenses to various income and expense accounts. Separate account records are maintained for petty cash, accounts payable and receivable, as well as other relevant transactions for example inventory and travel expenditures. These days, single entry bookkeeping can be done with DIY bookkeeping software to speed up manual calculations.

Double-entry program

Main article: double-entry bookkeeping system

Daybooks

A daybook is a descriptive and chronological (diary-like) record of day-to-day financial transactions also called a guide of original entry. The daybook’s details should be entered formally into journals to enable posting to ledgers. Daybooks include:

* Product sales daybook, for recording all of the sales invoices.

* Product sales credits daybook, for recording all the product sales credit notes.

* Purchases daybook, for recording all the buy invoices.

* Purchases credits daybook, for recording all the purchase credit notes.

* Cash daybook, generally known as the money book, for recording all cash received too as cash paid out. It might be split into two daybooks: receipts daybook for money received in, and payments daybook for money paid out.

Petty money guide

A petty money book is a report of little value purchases usually controlled by imprest program. Items for example coffee, tea, birthday cards for employees, a few dollars if you’re short on postage, are listed down in the petty money book.

Journals

A journal is a formal and chronological record of financial transactions before their values are accounted in general ledger as debits and credits. Journals are recorded in the journal daybook, which is one from the books of first entry. For every debit journal there should an equivalent credit journal. There must be at least two journal entries for every transaction recorded.

Ledgers

A ledger is a report of accounts, these accounts are recorded separately showing their beginning/ending stability. Unlike the journal, which lists monetary transactions in chronological order without showing their balance but displaying how much is going to be charged in each account. The ledger takes every monetary transactions from the journal and records them into the right account for every transaction listed. The ledger also sums up the total of every account that is transferred to the balance sheet and earnings statement. There are 3 various kinds of ledgers that deal with book-keeping. Ledgers include:

* Sales ledger, which deals mostly using the Accounts Receivable account. This ledger consists of the financial transactions made by clients towards the company.

* Buy ledger is really a ledger that goes hand and hand using the Accounts Payable account. This may be the purchasing transaction a company does.

* General ledger representing the original 5 primary accounts: assets, liabilities, equity, earnings, and expenses.

Chart of accounts

A chart of accounts is really a list of the accounts codes that could be identified with numeric, alphabetical, or alphanumeric codes allowing the account to be located within the common ledger.

Computerized bookkeeping

Computerized bookkeeping removes many of the paper “books” that are utilized to report transactions and generally enforces double entry bookkeeping.

On the internet bookkeeping

On the internet bookkeeping, or remote bookkeeping, allows source documents and data to reside in web-based applications which allow remote access for bookkeepers and accountants. All entries made to the online software program are recorded and stored in a remote place. The on the internet software program can be accessed from any place in the world and permit the bookkeeper or information entry individual to work from any place with a suitable information communications link.

For more information on accounting services, click here.

Complete Outsourced Accounting Services

Posted on January 15, 2012 by admin

Accountingoutsource2india is one of an important outsourcing companies based in Bangalore, India. It provides complete outsourced accounting services so that you can focus on your core business in US and India. The Professional accountants are experienced in working for both Indian and US clients they understand the nuances of it. And also proficient in working on all major accounting software such as Peachtree, Quicken, Sage accounting, Tally and so on.

Accountingoutsource2india offers the following Accounting services:

• Inventory Accounting Services
• Construction Accounting Services
• Manufacturing Accounting Services
• Educational Accounting Services
• Governmental Accounting Services
• Financial Services
• Accounts Processing Services
• Accounts Reconciliation Services
• Accountants Providing Services
• Summary of Accounts Services
• General Accounting Services
• Managed Accounting Services
• Health Care Accounting Services
• New Accounting Services
• Domain Specific Accounting Services
• Miscellaneous Accounting Services
• Specialized Accounting Services

Industries we serve generally belong to the following categories:

• Construction
• Manufacturing
• Education
• Financial
• Health care
• Government

We have the capability to receive kinds of Outsourced accounting of any size and complexity. Our management consists of managers who have been in the industry for more than 20 years serving at various levels of company. Everybody in the company from the accountants to top level management strive for client satisfaction and client retention. we do not compromise on quality of the output. We believe in the philosophy, quality brings clients. Sticking on to this philosophy helps us to build up ever-increasing credibility and establish long lasting, strong relationships with our valued clientele.

In the present days many other reputed firms provide basic accounting services if you would like to outsource your accounting services consequently you get more advantages like time savings and also cost effective solutions. All of the exceedingly regarded outsourcing companies offer services adapted to your proper accounting necessities. Whether you would like to a remote desktop clarification, server based service or if you use internet-based accounting software like QuickBooks, Peachtree, Sage Line 50, Quicken, MYOB, IRIS, EXACT, Property Ware, Rent Manager, NetSuite, LaCerte, Accountingoutsource2india will do the work for you.

So if you want grow to be more organized and focused in your core business, then you should turn to outsource accounting basic now for keeping your financial records constantly in check and well-maintained.

Benefits of Accounting Services

We have been worked successfully on a variety of Outsourced Accounting. Our client base comprises a varied mix of individuals and organizations of different size, status, and diverse business needs. Accountingoutsource2india is committed to deliver high quality accounting services. Meeting target is a specialty by which many of our satisfied clients recognize us. Great Prices are another attraction.

Accounting - How To Succeed 2

Posted on December 17, 2011 by admin

Accounting Double Entry

Accounting involves the classification, analysis and dissemination of financial information to those parties who require such information in order to make informed judgments and decisions based on the material.

It is the measurement and control of financial transactions which are, in essence, the transfer of legal property rights, between one party and another, made under binding arrangements. However, transactions that are not financial in nature are specifically excluded since they are regarded as not material.

The double-entry bookkeeping system used in accountancy is the linchpin used by businesses and organisations to record all of their financial transactions. The concept was first introduced in 1494 by the Italian mathematician Luca Pacioli.

It is based on the proposition that a measure of a business’s financial well being and a record of the results of its operations are best recorded by the use of accounts.

Accordingly, each account records an historical log of the changes in the monetary values relating to different aspects of the business. The method originally enunciated by Pacioli is now called double-entry bookkeeping.

The basis for this system is, quite simply, that each transaction is recorded in at least two accounts. It is established upon the supposition that for each financial transaction, there is at least one account being debited whilst, at the same time, at least one other account is being credited. The result of this process is that the total debits of the transaction are equal to the total credits so that the overall net value is zero.

Consider the following scenario. Suppose Mr A sells an article to Mr B, who then pays Mr A by means of a cheque. The bookkeeper working on behalf of Mr A would credit the account called “Sales” and debit the account called “Bank” (this would result in money flowing into the bank account). On the other hand, the bookkeeper working on behalf of Mr B would debit the account called “Purchases” and credit the account called “Bank”(this would result in money flowing out of the bank account).

It is the accepted principle that debit entries are added to the left hand side and credit entries to the right hand side of the general ledger account.

The general ledger, also known as the nominal ledger, is the main source for the recording of the accounting records of a business that makes use of the double entry process, bearing in mind that there is also a single entry process, which is a much more restrictive version.

It holds numerous accounts for such items as current assets, fixed assets, liabilities, revenue, expenses, gains and losses. The ledger accounts themselves are set up as T accounts, since they resemble the letter T when the account is empty.

It has been suggested that the double entry system dates back even further to the period of ancient Romeor Greece. Some critics of current accounting methods have suggested that the methodology has changed very little since this time, which must surely indicate that the principles set out hundreds of years ago were based on solid foundations.

Particularly pertinent in this respect is the approach engendered in social accounting which argues that business entities should pay more than lip service to the social and environmental impacts brought about by their activities.

It has been argued that accounting should not solely be concerned with the financial evaluation of economic events, but should embrace a wider audience, such as shareholders, and broaden its appeal beyond reporting simply financial profit and
loss.

Accounting - How To Succeed

Benefits Of Bookkeeping Software For Every Business

Posted on October 20, 2011 by admin

In the present days bookkeeping is vital part for each and every business industry for the main reason that if you want to keep all the financial transaction records appropriate for your business so bookkeeping accounting is better option to keep all the financial records appropriate for your business financial transactions includes sales, purchase, income and payment by an individual or organization.

Nowadays computerized bookkeeping systems easily simplify the bookkeeping procedures. The three major features why bookkeeping software is better than human accountant are correctness, automation and flexibility. Computerized bookkeeping is not only superior but also it provides the quick and correct processing of financial transactions. In today’s changing globalization world and with superior technology, a business can do constant re-validation so the business owners have choices when it comes to managing time and business.

We can see the benefits of bookkeeping accounting software neat and clean for the reason that it shows the ideal situation of our business in the market.

Using bookkeeping software has other benefits also:

It generates exact picture as well as ideal data of different accounts than the manual system.
Bookkeeping accounting software will give an ideal suggestion about the fixed assets and liabilities which will assist to arrange the financial statement and tax returns at the end of financial year.

At present, in the marketplace lots of bookkeeping software is existing in several special formats from simple spreadsheets to more complex data based bookkeeping software, they comprises but not limited to IRIS, LaCerte, MYOB, Peachtree, QuickBooks, Quicken, Sage Line 50. Occasionally, for a business, the bookkeeping software is a selection of simple system having limited accounting information.

To make bookkeeping software more efficient, each and every business should prepare regular financial transactions records to increase and develop financial control, take financial decision and achieve the preferred level in the market.

Accounting for Construction Contracts

Posted on October 10, 2011 by admin

A contract is a big job requiring considerable length of time to complete and comprising activities to be done outside the factory promises, viz. construction of a dam or school building, laying down railway lines, etc. Special cost and financial accounting is required to maintain the records of construction contracts. Since each contract involves considerable resources both in terms of men and materials, it is necessary to devise an appropriate accounting system to ascertain the cost and profit made on each contract separately.

Profit on incomplete contracts: At the end of an accounting period it may be found that certain contract have been completed while others are still in process and will be completed in the coming years. The total profits made on completed contract say be safely taken to the credit of the profit and loss account. But the same cannot be done in case of incomplete contracts. These contracts are still in process, and there are possibilities of profits being turned into to losses on account of heavy rise in prices of materials and labor and losses on account of other unforeseen contingencies. At the same time it does not also seem desire able to consider the profits only on completed contracts and ignore completely incomplete ones because this may result in heavy fluctuations in the figure of profit from year to year. A year in which a large number of contracts have been completed will show an abnormal high figure for profit while reserve may be the case in the year in which a large number of contracts remain incomplete. Therefore, profits on incomplete contracts should be considered, of course, after providing adequate sums for meeting unknown contingencies.

There are no hard and fast rules for the calculation of the figures for profit to be taken to the credit of profit and loss account. However, the following rules may be followed:

(a) Profit should be considered in respect of work certified only, work uncertified should always be valued at cost.

(b) No profit should be taken into consideration if the amount of work certified is less than 1/4 of the contract price because in such cases it is not possible to foresee the future clearly.

(c) If the amount of work certified is 1/4 or more but less than1/2 of the contract price, 1/3 of the profit disclosed, as reduced but the percentage of cash received from the contractee, should be taken to the profit and loss account. The balance should be allowed to remain as a reserve.

(d) If the amount of work certified is very much near completion, if possible the total cost of completing the contract should be estimated The estimated total profit on the contract then can be calculated by deducting the total estimated cost from the contract price. The profit and loss should be credited with that proportion of total estimated profit on cash basis, which the work certified bears to the total contract price.

(f) The whole of loss, if any, should be transferred to the profit and loss account.

Cost Plus Contracts: In certain contracts the contractee agrees to pay to the contractor the cost price (usually prime cost) of the work done on the contract plus an agreed percentage thereof by way of overhead expenses and profit. Such contracts are known as cost-plus contracts. The system of cost plus contract costing is employed in cases where it is very difficult for the contractor to quote the contract price because there has been no precedent which he may take as basis. It is also employed where the work to be done is not fixed at the time of placing order for the contract. The method is generally used where government happens to be the contractee. The method suffers from the following disadvantages:

There is no incentive to the contractor to eliminate waste and economies the cost of completing the contract. On the other hand, he is tempted to increase the cost because greater the cost, the greater will be his share of profit. In case of this system the amount of overheads recovered and profit made depends upon the value of materials used, which is subject to considerable price fluctuations. The agreed fixed percentage may, therefore, prove to be either too excessive or too low for covering overheads and profit.

Escalation Clause: Escalation clause is usually provided in the contract as a safeguard against any likely changes in the prices of utilization of material and labor. The clause provides that in case prices of items of raw materials, labor, etc. specified in the contract, change during the execution of the contract, beyond a specified limit over the price prevailing at the time of signing the agreement, the contract price will be suitably adjusted. The term of the contract specify the procedure for calculating such adjustment in order to avoid all future disputes. Thus, such a clause safeguards the interests of both the contractor and contractee in case of fluctuations in the price of materials and labor, etc.

Work in Progress: At the end of the accounting period a contract may still be in progress. The term work in progress refers to the work done so for in respect of the contract, which is still incomplete. It consists of the following:

(1) Working Certified: It refers to the work approved by the contractee. In case of contracts it is the useful practice for the contractor to get the work approved from time to time from the contractee. This is helpful to the contractor in two ways; first in case the contractee finds the work not up to specifications, he may ask the contractor to take corrective actions in time. Second, in contract accounts it is useful practice to have a system of progress payments, i.e., the contractee agrees to pay a certain percentage of the work certified (say, 80 or 90 percent). This is advantageous to the contractor since he gets immediate liquid funds.

(2) Work Uncertified: It refers to the work which has been done by the contractor but not so far approved by the contractee.

Work certified generally includes some profit element also while work uncertified is always valued at cost to the contractor.

Sub Contracts: The contractor may entrust some portion of the work to be done under the contract to a sub-contractor. Usually work of a specialized nature, i.e., steel work, special flooring, etc., is done by sub-contractors, who are responsible to the main contractor. The cost of such sub-contracts is a direct charge against the contract for which the work has been done.

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Category Archives: Accounting