How to deal with Work happening (WIP) Or Construction happening (CIP) In QuickBooks

Contractors and companies who purchase land after which develop it need to adhere to accounting needs for revenue and expense recognition which are quite different and wish a some modification from the standard QuickBooks setup.  The accounting rule is the fact that revenue and charges aren't to be recognized on financial claims as earnings and expense before the job is finished, or in some instances as certain key events are completed to do the job.  Many engineering firms, lawyers along with other similar organizations prefer to use work happening (WIP) accounts too.

The process referred to for handling work happening (WIP) or construction happening (CIP) in QuickBooks assumes that revenue and charges is going to be monitored as assets (for costs) and liabilities (for revenues) before the finish from the job, when they will be moved to earnings and expense accounts. 

1.    Generate a new account known as Work happening or Construction happening-visit Lists > Chart of Accounts, click on the Account button and choose New.  Choose Other Current Resource for that account type.

2.    Visit Lists > Item List and alter the cost account in your service products towards the resource account you place up above.  If you do not see a cost account, click on the button alongside This item can be used in devices..."

3.    Add two Other Charge products:

a.    Transfer from WIP - with WIP because the account and note within the description the amount ought to be positive

b.    Transfer into COS - with COS because the account and note within the description the amount ought to be negative

4.    Make certain to continually make use of the Products tab rather than the price tab on all of your transactions

5.    If you are using Job Profitability reviews, modify/filter these to incorporate your WIP account.  Click Modify Report, choose filters tab, choose Account, choose Multiple Accounts, check All earnings and expense accounts as well as your WIP account.  Commit to memory the report.

6.    Produce a are accountable to track the total amount in WIP by job by visiting Reviews > Custom Summary Report.  Click Modify Report, choose Display Posts = Account List and Display Rows = Customer.  Click the Filters tab, choose Account = your WIP account.  Commit to memory the report.

7.    When the project is finished, prepare a bill or sales receipt having a line for that sales cost (planned for an earnings account) after which add some two other charge products you produced above ensuring to make use of an adverse amount for Transfer into COS. Once done, the ending total for that invoice should match the sales cost.