A
Accounts Payable: The amount of money owed to suppliers, subcontractors, and other vendors for goods and services received.
Accounts Receivable: The amount of money owed to the contractor by customers for goods and services provided.
Accrued Expenses: Expenses that have been incurred but not yet paid.
Accrued Revenue: Revenue that has been earned but not yet received.
Actual Cost: The actual cost of a job, including labor, materials, and overhead.
Allowance: A sum of money set aside to cover potential costs or losses.
Applied Overhead: The overhead costs that have been allocated to a specific job.
Audit: A formal examination of a company’s financial records and practices.
B
Back Charges: Charges that are made against a subcontractor for work that was not performed according to contract specifications.
Balance Sheet: A financial statement that shows a company’s assets, liabilities, and equity at a specific point in time.
Bond: A guarantee of payment for a contract.
Budget Analysis: A process of evaluating and monitoring a company’s actual financial performance against its planned or projected financial goals.
Business Interruption Insurance: Insurance that covers losses incurred by a business due to unexpected events or interruptions.
C
Cash Flow: The amount of cash or cash-equivalents that is moving in and out of a business.
Cash Flow Projection: A financial planning tool that forecasts a company’s future cash flow over a period of time.
Change Order: A written agreement between the contractor and customer that changes the scope of the contract.
Claim: A request for compensation or damages made by a contractor or subcontractor against an owner or another party.
Construction Accounting: The specialized branch of accounting that deals with the financial management of construction projects.
Contingency: An amount of money set aside to cover potential costs or losses.
Contract: A legally binding agreement between two or more parties.
Cost Accounting: The process of tracking and analyzing the costs associated with a project.
Cost of Goods Sold (COGS): The cost of materials and labor used to produce a product or service.
Cost Overrun: A situation where a project’s actual costs exceed its estimated costs.
Credit: An entry made on the right side of an account ledger to indicate a decrease in assets or an increase in liabilities.
D
Debit: An entry made on the left side of an account ledger to indicate an increase in assets or a decrease in liabilities.
Depreciation: The decrease in the value of an asset over time due to wear and tear.
Direct Costs: Costs that are directly attributable to the production of a product or service.
Direct Labor: The wages and benefits paid to workers who are directly involved in the production of a product or service.
E
Estimate: An educated guess as to the cost of a project.
F
Fixed Costs: Costs that do not vary with the amount of work performed.
G
General Ledger: A record of all financial transactions.
General Liability Insurance: Insurance that protects a business against claims of injury or damage caused by the business or its employees.
Guaranteed Maximum Price (GMP): A contract provision that limits the total price of a project to a specific amount.
I
Income Statement: A financial statement that shows a company’s revenues, expenses, and net income over a specific period of time.
Indirect Costs: Costs that are not directly related to the production of a product or service.
Insurance: A risk management tool that provides financial protection against unexpected events or losses.
J
Job Costing: The process of tracking and analyzing the costs associated with a specific job.
L
Labor burden: The indirect costs associated with employing workers, such as taxes and benefits.
Lien waiver: A document signed by a subcontractor or supplier, waiving their right to file a lien against the property for non-payment of services.
Liquidated damages: A sum of money agreed upon in the contract to be paid by one party to another if certain conditions are not met.
Long-term debt: Debts that are not due within the next 12 months and are typically used to finance large purchases, such as equipment or property.
M
Markup: The amount added to the cost of a job to determine the selling price.
Material overhead: The costs associated with the purchase and storage of materials.
Milestone: A significant event or stage in a project that triggers a payment or indicates progress.
Mobilization: The process of preparing a job site for construction, including setting up equipment and supplies.
Mortgage: A loan taken out to purchase a property, with the property serving as collateral.
N
Net income: The amount of money left over after all expenses and taxes have been paid.
O
Overhead: The indirect costs associated with running a business, such as rent, utilities, and office expenses.
P
Payroll: The amount of money paid to employees for their work.
Percent complete method: A method of accounting that recognizes revenue and expenses in proportion to the percentage of work completed on a project.
Progress billing: Invoicing a customer for a portion of the contract amount based on the percentage of work completed.
Project budget: The estimated cost of a project, including all labor, materials, and overhead costs.
Project cost report: A report that tracks the actual costs of a project compared to the budgeted costs.
Q
Quantity survey: A detailed analysis of the materials and labor needed to complete a project.
R
Retainage: A portion of the contract amount that is withheld until the job is completed.
S
Schedule of values: A breakdown of the project into various components, each with a specific value, used for progress billing and payment.
Subcontractor: A company that is hired to perform a specific task on a project.
T
Time and materials contract: A contract where the customer pays for the actual cost of labor and materials, plus a markup for overhead and profit.
U
Unit price contract: A contract where the customer pays a set amount per unit of work completed.
V
Variance analysis: The process of comparing actual project costs to the budgeted costs to identify any discrepancies and potential cost overruns.
W
Work in progress (WIP): The amount of work that has been completed but not yet billed.
Workforce management: The process of tracking and managing employee time and attendance, payroll, and benefits.
X
(none)
Y
Year-to-date (YTD): The period of time from the beginning of the current year to the present.
Z
Zero-balance account: A bank account with a zero balance, used to disburse funds for a specific purpose, such as payroll.
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