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Single-Entry Accounting
What is Single-Entry Accounting?
Single-Entry Accounting is a simple and basic form of accounting predominantly used by small businesses in construction and other sectors. Rather than double-entry bookkeeping, which records each transaction twice (as a debit and a credit), single-entry accounting records each transaction only once. It's essentially a record of cash sales and expenses, historically likened to a checkbook register. In the construction industry, this method might be used by small contractors or independent craftsmen who have relatively simple accounting. For instance, a freelance carpenter might use single-entry accounting to record cash received from clients and expenditures for supplies. However, it's crucial to note that while single-entry accounting may be simpler and less time-consuming, it does not provide as comprehensive a financial picture as double-entry accounting. It fails to track assets and liabilities and can make it challenging to produce financial statements. Therefore, it is most suitable for the smallest businesses within the construction industry.
Trusted by trade contractors across the country
Other construction terms
What is a Release?
In the construction industry, a release is a legal instrument that acts to terminate any legal liability between the releasor and the releasee, signed by the releasor. It is often used to settle disputes or claims, with one party agreeing to release the other from any existing obligations, responsibility or further legal action in return for a negotiated compensation. It may also refer to a point in a construction project where work is considered complete to a given level, allowing for payment or the transfer of responsibility to the next party involved in the process.
What are Fixed Assets?
Fixed assets, also known as property, plant, and equipment (PPE), are long-term tangible assets owned by a business for the production, supply, or rental to customers. Within the construction industry, these assets are essential as they are not only used in day-to-day operations but are crucial for long-term business growth. They encompass a broad range of items such as buildings, heavy machinery, land, vehicles, and other tools or equipment. These assets are distinguished by their durability and are not to be sold throughout regular business operations. The value of fixed assets is reflected on the balance sheet and it decreases over time due to normal wear and tear, also known as depreciation. Real estate, construction equipment like cranes or bulldozers, and even software used for project planning are some examples of fixed assets in the construction industry. They are considered investments because their utilization helps to generate income.
What is a Schedule of Values (SOV)?
A Schedule of Values (SOV) is an essential financial tool used in the construction industry. It's essentially a detailed plan that lists out the entire scope of construction work and assign costs to each element. The SOV is organized into a series of line items categorized by phase, task, or materials required for the job. This document is a critical component of successful project management as it breaks down the work into measurable parts to calculate and track costs throughout the project. This ensures that the project stays on budget and timeline. The SOV can be updated as the project progresses to reflect any changes. It provides a useful framework for monitoring progress, managing payments, and resolving disputes, making it integral to the financial health of a construction project.
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