Bean Counting 101

A Crash Course in Construction Accounting

by Arnold S. Grundvig, Jr.

Preface

Before we begin, let’s get some things on the table. This book was designed for the person who does not have an accounting background, but needs to do construction accounting. The goal of this book is to help readers understand the terminology and the basic processes used in accounting, particularly job costing, the specific accounting process designed for the construction industry. This book is not a replacement for formal accounting training or a good CPA.

We settled on the name "Bean Counting 101" to emphasize that this is a basics only presentation. The term "Bean Counting" was not intended as an insult. We consider it a "term of endearment" because at A-Systems Corporation we are all bean counters of sorts. Of course, we are also the creators of A-Systems JobView, powerful job cost accounting software for the construction industry.

While there are many kinds of accounting, this book focuses on construction accounting, technically known as Job Cost Accounting. The reason for this emphasis is simple: we want to assist users of A-Systems’ construction accounting software. We want them to succeed and they can’t do that without doing good accounting.

A significant number of people who need our accounting software have no clue what job cost accounting is or how much it can do for them. Many of them have no idea that there is an accounting process designed precisely for their needs. Without this knowledge, they struggle to track and control costs by using spreadsheets or generic accounting software. There is a better way. That way is using real job cost accounting software, A-Systems JobView.

There is also a group of builders that has figured out that they need specialized accounting software to successfully operate a construction company, but they are not accountants. They think they lack the skill to do job cost accounting. What they need is software that does it for them. The purpose of this book is to help them understand the concepts behind accounting, so they can get the information they need without worrying.

Throughout the book, every effort was made to define each accounting process in the simplest, most straightforward language. A-Systems JobView was designed to be easy to use, even for beginners. Of course, actual training for A-Systems JobView is right on the CD.

The author’s background in accounting is unique. He learned accounting by taking financial statements apart, not by putting them together. He was a senior financial analyst for Dun & Bradstreet and First Interstate Bank. Upon receiving financial statements for analysis, he was expected to determine what they meant. In order to do this, it was necessary to know how they were put together. This is just the opposite of how most people learn accounting. Because it was so different, his perspective on accounting is unique.

Table of Contents

From the Beginning, Please
Job Costing
Chart of Accounts
Debits and Credits
Banker's Terminology
Visual Chart of Accounts
The Balance Sheet
The Income Statement
Accounting: Step by Step
Accrual versus Cash Method of Accounting
Depreciation
Construction Accounting is Job Cost Accounting
Cost Codes, a Job Costing Tool
Job Cost Analysis
How to Succeed Using Job Cost Accounting

Glossary

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