3. Cost Record and Reports

(a) Architect's Job Cost Record

(b) Architect's Job Cost Summary Record

The general books of account are used in the same manner and for the same purpose as books of their character usually are. The accounts appearing in the general ledger are generally about as follows:

Asset Accounts

Cash in Bank

Petty Cash Fund

Notes Receivable

Accounts Receivable

Investments and Securities

Furniture, Fixtures, Equipment, etc.

Liability Accounts

Notes Payable

Accounts Payable

Income and Expense Accounts

Direct Expense

Indirect Expense

Income from Professional Services

Miscellaneous Income

Net Worth Accounts

Partners' Capital Accounts

Partners' Drawing Accounts

Profit and Loss

In addition to the cost records which are controlled by and reconciled with the accounts carried on the general ledger for Direct Expense and Indirect Expense, subsidiary ledgers are sometimes carried for accounts receivable, notes receivable, investments and securities, notes payable, and accounts payable.

Some expenses incurred and portions of salaries paid are not chargeable to any particular job or contract. These are charged to Indirect Expense and those which can be allocated to a particular job or contract, to Direct Expense.

Certificate Ledger

The ledger used for recording entries in connection with construction contracts is called the certificate ledger. It is independent of the architect's general books of account and the record contained therein is not incorporated in trial balances or balance sheets. Its purpose is to assist in the preparation of statements showing the status of transactions between the owner and the contractor and between the owner and the architect.

Form 33. Architect's Certificate Ledger Sheet

These are loose-leaf sheets printed on both sides.

The ledger sheets used can either be standard ledger ruling with double debit and double credit columns, or a specially printed sheet (Form 33).

When the standard ledger sheets are used, the columns are used for: (1) Original Contract, (2) Extra Orders, (3) Deduction Orders, and (4) Certificates Issued. The accounts illustrated below follow the double debit and double credit plan merely to present the features separately.

The specially ruled sheet has only three columns: (1) Contracts and Additions, (2) Payments, and (3) Deductions. "Payments" corresponds to "Certificates Issued," as an architect only issues certificates and settlements are made by the

owner. In practice, the three-column sheet is preferable. Only one entry is ever made for the original contract.

The total price given in the contract is charged to the owner's account and credited to the contractor's account. Simultaneously, an entry is made charging the owner and crediting the architect with the latter's fee, calculated at the percentage he is to receive for his service.

Extra orders increasing the work to be done by the contractor are credited in the Extras column on the contractor's account and debited in the Extras column on the owner's account. The value of work omitted is debited to the contractor's account and credited to the owner's account in the Deduction column. The architect's account is adjusted at the same time.

Payments are made by the owner direct to the contractor on certificates issued by the architect. The architect's accounting record, therefore, ceases with the issuance of the certificate. The amount of the certificate is charged to the contractor's account when issued and credited to the owner's account in the columns marked "Certificates Issued."

The above accounts illustrate the principle adopted by some architects of charging the owner with the amount of the architect's commission and crediting the owner with the amount of certificates issued to cover payments due the architect from time to time.

The net amount of contracts, plus extras, less deductions, as shown by the owner's account, is the total obligation of the owner to the contractor and to the architect and should agree with the sum of the contract and extras given in the contractor's and the architect's accounts. The total contract and extras, shown by the architect's account, should equal the result obtained by multiplying the contractor's contract and extras by the percentage in the architect's agreement with the

owner.

The total of "Certificates Issued" appearing on the owner's account should equal the sum of all certificates issued on behalf of the contractor and the architect. The architect's account with the owner for his own fee certificates is sometimes separated from the one showing contractor's certificates.

A trial balance of the certificate ledger taken of the above accounts would show:

The procedure outlined above is not affected by the number of contractors employed by the owner on the work. A separate contractor's account is opened for each additional contractor employed.

Relation of Ledger to Certificates

The object of the various columns is to aid in quickly furnishing the data required for the architect's certificate. It usually contains the following information:

This information is obtained from pro forma account 42. When construction work has been entirely completed and the