Construction Accounting vs. General Accounting: How to Navigate Key Differences

Construction accounting is a special type of accounting that handles the typical issues in the construction industry. These challenges comprise complex contracts, material costs, prolonged project timelines, and handling labor. While construction accounting tracks the same fundamental principles as general accounting, it demands a distinct strategy. This difference arises from its project-based nature and industry-specific needs.?

Unlike regular accounting, which suits most businesses, construction accounting addresses unique challenges. This distinction makes it different from areas like eCommerce or manufacturing. The focus is on what makes construction accounting unique.

Let’s look at how construction accounting is distinct from general accounting.

Why Do We Need Construction Accounting?

Construction accounting concentrates on the economic conditions of construction projects. It allows businesses to track costs, revenues, and contracts unique to the construction industry. The main benefits include better cost management and accurate revenue tracking. Additionally, improved project monitoring helps companies see how profitable each project is. Key features include job costing to track expenses for each project and following revenue rules like ASC606. It also involves managing many contracts and subcontractors to ensure accurate records.

Key Differences between General Accounting And Construction Accounting

Which One is Better?

Note: Construction accounting is strong in areas specific to managing construction projects, while general accounting covers broader financial management tasks.

Conclusion

Construction accounting focuses on managing project-specific finances. It enables construction companies to control costs, manage cash flow, and track profits for each project. By understanding these key differences, construction businesses can handle their finances and succeed.

Due to its complexity, construction accounting requires specialists. If you need help, Expertise Accelerated can connect you with experts tailored to your needs. Book a free consultation to learn more!