The work performed during that month was worth $250,000, all labor and rentals included.Īs soon as you submit your first pay application (App #1) in April, you record the revenue of $250,000 – even though you haven’t received it yet. ABC Earthmovers completed one project in the month of April. For this example, we are using the same numbers as we did for the cash example above. The accrual based example is treated differently. Under accrual basis accounting, you effectively assume that work is acceptable to the other party and that you will receive the payment due. The moment you send your invoice or pay application to the GC, you record the revenue. In this process, you don’t need to wait to actually get paid or issue the check to your supplier. The accrual based method is a way to track the money you will receive in the future for each project. When using the accrual based method, you record the revenue or expenses during the period the work is performed – whether or not you received or paid any money during that period.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |