Branch Office Cash Book

Each branch office accounting unit should submit a cash report at least weekly. A complete cash report can be obtained without much additional work. A cash book can be prepared with a perforated sheet, on which, by using carbon sheets, an exact copy of cash disbursements is obtained simultaneously with the making of the original entry on the cash book.

A tabulation of the receipts during the period covered by the report can be shown on the extreme upper part of the sheet, as a contractor's cash receipts are generally large in amount but few in number.

Description and Use

THE JOURNAL

The journal used is an ordinary two-column journal. All entries on the journal are supported by journal vouchers. Journal entries are limited chiefly to:

I. Entries covering applications and bills rendered to owners for work performed by the contractor.

2. Entries covering the acquisition or disposal of securities for considerations other than cash.

3. Entries for controlling movement and billing of equipment. 4. Entries setting up inventories.

5. Profit and loss entries.

As few of these transactions occur monthly, the number of journal entries is reduced to a minimum, except at the close or opening of a fiscal period.

The use of voucher covers is suggested for convenience in filing all papers supporting individual journal entries. The head of the accounting department or someone high in authority should approve all journal vouchers. An exception might possibly be made of those covering routine entries, such as

applications to owners during progress of work and entries. covering the equipment reports used to control the shipping and billing of equipment. Profit and loss entries and those covering final bills to owners particularly should be approved.

Failure properly to word the description of a journal entry so as clearly, fairly, and fully to express the facts underlying it, may involve unnecessary trouble and explanations when field tax audits are made. While bookkeeping records but does not create facts, the entries should be a fair statement of what has taken place.

Branch Office Journals

When a contractor's branch offices operate as separate accounting units, each office should be required to use a journal having a perforated sheet. A carbon copy of all entries on branch office journals should be sent to the contractor's main office.

NOTES RECEIVABLE AND NOTES PAYABLE RECORD

This record is a book carried in stock by all stationers. It is ruled so as to provide spaces for showing the full details of notes receivable, the date, maker, amount, term, collateral, etc. The information shown for notes payable is the date, payee, amount, term, collateral, etc.

ACCOUNTING. The total of unpaid notes receivable and of notes receivable discounted, as shown by this record, must agree with the totals shown by the controlling accounts on the general ledger.

The total of the outstanding payables appearing on this record must agree with the balance of the Notes Payable account in the general ledger.

PLANNING ACCOUNTING SYSTEMS

An accounting system that would meet the requirements of the very large construction companies would, of course, be too expensive for the contractor who built only small residences. A system that would prove ample for a small contractor would bring disaster to a large company through failure to provide proper controls.

When deciding on which of the details given in this book should be applied to a particular contractor's business, the reader should be guided by the cost of maintaining the system installed, the size of the contractor's existing clerical and field organizations, the volume and character of his normal business, the average time required to complete his average contract, and the safeguards and controls which business prudence requires.

The chief change which the author recommends for applying the system outlined for a large operation to a smaller one is in connection with the purchase register discussed in detail in the next chapter. The system for the large operation provides for two sheets, one acting as the general accounting record and the other as the basis of the entries on the cost ledgers. For smaller operations, a wider sheet can be designed; combining the general accounting and cost records. Separate sets of sheets are kept for each job or contract. The totals of the cost analysis columns can be carried forward from one sheet to another and a continuing analysis kept for each job.

The theory of the accounts in the various ledgers does not change because of the size of the jobs. The volume of entries and the number of accounts do. The ledger sheets can be so designed as to indicate the facts mentioned in this chapter and Chapters XI and XII and at the same time be uniform in size. All or practically all accounts can then be kept in one ledger binder, tabbed index sheets being used to indicate the grouping of accounts for creditors, subcontractors, general ledger accounts, etc.

Description

CHAPTER X

THE PURCHASE REGISTER

The purchase register consists of sets of loose-leaf sheets. Form 18 is the register containing the entries from which postings are made to cost ledgers, and Form 19, the accounting department's record of original entry. By the use of carbon sheets, the record of expenditures is prepared simultaneously for both departments. This record is the data appearing in the columns headed "Register Number," "Date," "From," "Description," and "Amount." The total of the amount col

umn is the sum charged to each individual construction account on the general ledger. An automatic control is thus established, insuring the cost of construction shown by the general accounting books being always in agreement with the cost indicated by the cost records.

All charges and credits affecting construction costs are entered on these register sheets. The only debits or credits posted to construction accounts from any other source are journal entries for bills rendered to owners, and profit and loss entries.

Theory of Purchase Register

The register for the cost analysis department is a tabulation of all debits and credits entering into the cost of construction, with their distribution to the cost accounts to which the expenditures apply.

The register for the accounting department is a doubleentry record. The total of the amount column is the debit to the job or other account indicated at the top of the sheet

Form 18. The Purchase Register-Cost Analysis Department Record