Accounting for contract revenue: builders' burden?

Article Abstract:

The Tax Reform Act of 1986 has made accounting for long-term contracts more difficult. The Act does not distinguish between the ways in which construction and industrial contractors use the completed contract method. The new rules may cause cash flow problems for contractors who use percentage of completion. Under the new rules, the percentage of completion is only determined by comparing allocable contract costs incurred before the end of the taxable year with estimated total contract costs. Certain costs are excepted from capitalizable costs. All taxpayers who have long-term contracts will be affected.

Taxation, Public contracts, Government contracts, Government contractors

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What shall we account for? A matrix approach relates cost data to corporate goals and strategies

Article Abstract:

Serious problems can arise when managers do not correctly interpret cost accounting data. A cost-accounting-by-goals-and-strategies (CAGS) approach is developed to help managers avoid this problem. The purpose of CAGS is to help firms relate costs to the benefits that it intends to receive. Current cost accounting systems tend to over-emphasize the flows from the system and neglect its structure. The three kinds of information that cost accounting systems should provide are: inventory valuation, cost analysis, and internal performance valuation. The CAGS approach takes a matrix view of manufacturing.

Management, Strategic planning (Business), Cost accounting

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