Two important factors in determining the appropriate construction chart of accounts for use in financial accounting for a construction business are the size and type of the construction business.The chart of accounts is more than a financial tracking mechanism; it is a company management tool. It not only provides financial information in a format that is amenable to audit and for preparation of
. tax-related documentation, but should also be able to present that data in a manner where company executives can quickly gauge the performance of the company (to include being able to quickly identify any potential issues).Smaller construction enterprises, such as family-owned and other single-site operations, will typically have fewer specific needs for specific accounts to capture accounting revenues and expenditures for the company. For them, a standard chart of accounts that adequately covers the basic assets, liabilities, revenue and expenses will suffice.Larger companies, however, such as home builders, remodelers, developers and commercial builders will typically require a larger and more extensive chart of accounts. The additional accounts and categories are not only needed to capture the larger variety of accounting variables, but to also be able to assign individual expenses to additional layers of accounting categories, such as for multiple construction sites, product development, shareholder equity and the like.Whatever the size of the construction-related company, in order to be useful its chart of accounts should have classifications that accurately reflect the financial data to be tracked and individual accounts should be easily identifiable with unique account numbers.In addition to structural considerations, employees should be trained not only in the structure of the chart of accounts, but also in the appropriate account classifications to use when coding financial data "" this includes not only bookkeepers and accountants, but anyone who will be coding financial information for the chart of accounts.Following the basic guidelines for a construction chart of accounts should result in accurate financial information that serves the needs of company management, internal and external financial auditors, and company shareholders. More reference links: http://www.rpmincorporated.com/docs/chart.pdf http://www.nahb.org/generic.aspx?genericContentID=29577
