Hi everyone! My Name is Terry and I’m here to study for the CCIFP exam. (Certified Construction Industry Financial Professional).
Accounting for And Allocating Indirect Costs:
Allocating indirect costs are as important as direct job costs. Although, these costs are not directly related, they are still costs that need to be accounted for to obtain the true costs of the jobs.
So, how do we account for these indirect costs?
For Further Reading:
The Body of knowledge for the CCIFP – Answers from previous Post!
On our previous post we discussed Chapter 4 – Income Recognition and we had homework!
How many of you did your homework? Come on now… raise your hands!! : – )
Well, no worries… because we are going to answer them in this post!
We’ve previously discussed Income Recognition and how it differs in construction accounting versus other industries.
By now I’ll assume everyone has “The Book” or has been following along. If you are just getting started or new following the CCIFP Study Blog, you can read up on the Income Recognition or get a copy of “The Book” by clicking this link.
I’d like to thank you all for following, and encourage your feedback / responses. Feel free to comment anytime!
Alright then…. Let’s get started!
There are several variables that come into play when working with revenue recognition in the construction industry.
Chapter 4 4.01 in “The Book”, discusses the Financial Reporting – GAAP (Generally accepted accounting principles), that must be followed when presenting your financials. As most of us know, and for those of us who don’t know, the construction industry has two types of methods for financial accounting and reporting which are conformed with GAAP.
The two GAAP acceptable methods of the income recognition: