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This completely revised and expanded Fifth Edition teaches you how to guide and evaluate your company’s financial performance. We might dread it, but every company should produce monthly financial statements and other reports for management use. Just as any home or building must rest on a secure and solid foundation, an understanding of accounting should be the firm foundation upon which a company rests. This revised and expanded fifth edition of Accounting and Financial Management for Residential Construction assumes the reader has no previous knowledge of accounting. It uses straightforward and easy-to-comprehend explanations and illustrations to help builders, remodelers, and developers understand accounting and bookkeeping terminology and procedures. Financial Management Made Easy The author, Emma Shinn, makes it easy for you to follow and understand. She leads you through the process in a methodical manner, building concept upon concept so that even the most complex accounting functions can be easily understood. This book can be used by any type of builder (single-family, multifamily, or commercial), remodeler, and developer. It includes the complete, updated NAHB Chart of Accounts (to be adapted to your business) and the job cost control subsidiary ledger accounts for direct, indirect, and land development costs. Accounting and Financial Management includes chapters for remodelers, developers, and multiproject companies; the complete, updated NAHB Chart of Accounts; and a list of NAHB Approved Software® venders. It tells you how to:
Why should the builder, remodeler, or developer worry about accounting at all? Through the accounting function, you can obtain timely financial information that will make the decision-making process less of a guessing game. Accounting records contain a wealth of historical information that you can use effectively to:
The Author Emma Shinn of Shinn Associates Inc., Littleton, Colorado, is a consultant and educator for the homebuilding industry in accounting and financial management systems. In the 1960's she worked for Touche, Ross, and Company (now Deloth and Ross). She has an MBA in accounting from The American University in Washington, D.C., and is a certified public accountant (CPA). She helped draft the Builder's Cost of Doing Business Study conducted by the National Association of Home Builders. Table of Contents: Forward, vii Introduction, 1 1. Designing the System and Choosing an Accountant, 3 Designing the System, 3 Choosing an Accountant, 4 The Bookkeeper, 5 The Accountant, 5 The Certified Public Accountant, 5 CPA Firms and Level of Services Available 6 Audits, 6 Reviews, 6 Compilations, 6 2. Basics of Accounting, 7 Accounting Systems, 7 Financial Accounting System, 7 Managerial Accounting System, 7 Accounting Equation, 9 Assets, 9 Equities, 9 Debits and Credits, 9 Net Income, 10 Revenues, 10 Cost of Sales, 10 Operating Expenses, 11 Financial Statement, 12 Income Statement, 12 Balance Sheet, 12 Users of Financial Information, 12 Reporting Requirements, 14 Audit Trail, 14 3. Accounting Methods and Terms, 15 Accounting Methods, 15 Cash or Accrual, 15 Completed Contract or Percentage of Completion, 16 Direct Costing or Absorption Costing, 17 Terms, 17 Revenues Versus Cash, 17 Expenses Versus Cash Disbursements, 17 Profit Versus Cash Balance, 17 Expenses Versus Costs, 17 Indirect Construction Cost Versus, 17 Overhead, 17 Fixed Versus Variable Costs, 17 4. Chart of Accounts, 19 Structure, 19 Numerical Coding System, 19 Customizing the Chart of Accounts, 20 5. Bookkeeping Procedures, 21 Flow of Information, 21 Journals, 21 General journal, 21 Special journals, 22 Ledgers, 22 General Ledger, 24 Subsidiary Ledgers, 24 Processing of Data, 25 Journalizing, 25 Posting, 25 Adjusting Entries, 25 Closing Entries, 25 Office Filing Procedures, 25 6. Internal Control, 27 Objectives and Requirements, 27 Authorization, 27 Record Keeping, 27 Custodianship, 27 Policies and Procedures, 27 Cash Management and Control, 28 Checking Account Procedures, 28 Cash Balance Control, 28 Cash Receipts and Disbursements, 30 Petty Cash, 30 Loan Administration, 31 Delegate Responsibility, 31 Learn and Follow Procedures, 31 Account for the Funds, 31 Estimating and Purchasing, 32 Coordination and Accounting System, 32 7. Financial Reports, 33 Balance Sheets and Income Statements Balance Sheet, 33 Balance Sheet, 33 Assets, 35 Liabilities, 35 Owners' Equity, 35 Income Statement, 35 Revenues, 35 Cost of Sales, 36 Operating Expenses, 37 Other Income and Expenses, 38 8. Financial Analysis, 39 Gross Profit Analysis, 39 Cash Flow Analysis, 40 Financial Ratio Analysis, 42 Liquidity Ratios, 42 Profitability Ratios, 42 Leverage Ratios, 43 Return on Investment Ratios, 43 Ways to Improve Ratios, 44 Return on Sales, 44 Asset Turnover, 44 Leverage, 45 Breakeven Analysis, 45 9. Overview of Job Cost Accounting Design the System, 47 Establish the Job Cost Format, 48 NAHB-McBee One-Write System, 48 Multicolumn Job Cost System, 50 Code of Invoices, 50 Improve Control with a Purchase Order System , 50 Prepare the Job Cost Reports, 50 10. Processing System, 53 In-House Computer, 53 Manual Systems, 53 One-Write Systems, 53 Computerizing Your Accounting Functions, 54 Accounting Applications, 54 Service Bureaus, 54 Other Applications, 55 NAHB Software Review Program, 56 11. Tips for Multiproject Companies, 57 General Accounting, 57 Chart of Accounts, 57 Profit Centers, 58 Job Costing, 58 Indirect Construction Cost, 58 Marketing and Financing Expenses, 59 General and Administrative Expenses, 59 Financial Analysis, 59 12. Tips for Developers, 61 General Accounting, 61 Chart of Accounts, 62 Job Costing, 62 Development Cost, 62 Indirect Costs, 63 Financing Costs, 63 Lot Cost Allocation, 63 Lot Pricing, 64 Financial Analysis, 64 13. Tips for Remodelers, 65 General Accounting, 65 Chart of Accounts, 66 Credit Approvals, 66 Job Costing, 67 Completed Contracts, 67 14. Financial Planning, 69 Elements of a Budget, 69 Sales Plan, 69 Production Plan, 71 Land and Land Development Costs, 71 Direct Construction Costs, 71 Indirect Construction Costs, 71 Cost Estimate Summary, 71 Cost of Sales Plan and Gross Profit Plan, 71 Operating Expenses Plan, 71 Profit Plan, 72 Cash Flow Report, 72 Reports, 77 15. Technical Aspects of Accounting, 79 Land Acquisition and Development Treatments, 79 Preacquisition Costs, 79 Acquisition Costs, 79 Land Development Costs, 79 Accounting for Amenities, 80 Carrying Costs, 80 Direct Construction Costs, 80 Indirect Construction Costs, 81 Consistency, 83 Revenue Recognition, 83 Full Accrual Method, 83 Percentage-of-Completion Method, 84 Installment Sales Method, 85 Cost Recovery Method, 85 Deposit Method, 85 Other Sources of Information, 85 Appendixes Outline of the NAHB Chart of Accounts, 89 Complete NAHB Chart of Accounts, 93 Basic Accounts For Small-Volume Businesses, 105 Direct Construction Costs Subsidiary Ledger, 109 Indirect Construction Costs Subsidiary Ledger, 113 Land and Land Development Costs Subsidiary Ledger, 115 NAHB Approved Accounting Software, 117 Notes, 119 Figures Includes: Book By: Emma Shinn Published by: National Association of Home Builders (NAHB) ISBN: 978-0-86718-635-2 150 Pages, 8-1/2 x 11 5th Edition |
