Booksmrt

Industry guide

Construction and trades bookkeeping

Construction and trade businesses need job-level visibility across materials, subcontractors, labor, deposits, progress billings, retainage, and equipment.

Booksmrt editorialUpdated

CLOSE FILE · ILLUSTRATIVE USD EXAMPLE

Job 204: separate earned margin from cash collected

APPROVED JOB-COST VIEW

$80,000 earned revenue

Materials $24,000 + direct labor $18,000 + subcontractors $10,000 = $52,000 direct cost.

$28,000 gross profit · 35%
COLLECTION VIEW

$72,000 collected

Of an $80,000 invoice, $8,000 remains contractually retained. That amount still needs a release condition and an expected collection date.

Gross profit is not cash available.

Assume the $80,000 is earned under an approved recognition policy and the receivable is collectible. This workpaper does not select a long-term-contract tax method or establish percentage of completion. Those decisions need the actual contract and professional review.

What makes the job margin unreliable?

Uncoded subcontractor bills, labor posted to the wrong job, unapproved change orders, and material purchases that have not yet been allocated. Trace each exception before blaming estimating or site performance.

What the monthly close has to prove

  • Apply consistent job and cost codes to direct activity.
  • Reconcile customer deposits, progress invoices, and collections.
  • Track subcontractor bills and payment records.
  • Separate repairs, supplies, tools, vehicles, and equipment under approved policies.

Documents to collect

  • Customer contracts and invoices
  • Vendor and subcontractor bills
  • Bank and card statements
  • Payroll and job-cost reports
  • Equipment purchase records
  • Change orders and retainage schedules

Common failure points

  • Deposits treated as final revenue without context
  • Materials and overhead mixed
  • Loan principal posted to expense
  • Equipment purchases fully expensed without policy review
  • Job profitability unavailable

Example

A $25,000 customer deposit affects cash immediately, but the revenue timing depends on the accounting method, contract, and work performed.

Sources

Keep learning

Gross profitGross profit is revenue minus the direct cost of producing the goods or services sold.AssetAn asset is a resource controlled by the business that is expected to provide future economic benefit.ExpenseAn expense is a cost recognized in earning revenue or operating the business during a period.Accounts payableAccounts payable is money a business owes vendors for goods or services already received.Accounts receivableAccounts receivable is money customers owe a business for goods or services already delivered.

Educational information only. Booksmrt provides bookkeeping services, not tax, legal, audit, or investment advice. Confirm material accounting and tax decisions with the appropriate professional.