Full Answer Section

Sample Transactions

Here are some sample transactions that a custom home building business might record:

Transaction 1:

• Description: Purchased $10,000 worth of lumber for a new construction project.
• Accounting entry: Debit Materials Inventory $10,000, Credit Accounts Payable $10,000.

Transaction 2:

• Description: Paid $5,000 to a subcontractor for electrical work on a new construction project.
• Accounting entry: Debit Construction in Progress $5,000, Credit Accounts Payable $5,000.

Transaction 3:

• Description: Billed a customer $20,000 for the first phase of construction on their new home.
• Accounting entry: Debit Accounts Receivable $20,000, Credit Revenue $20,000.

Transaction 4:

• Description: Received $10,000 from a customer in payment for the first phase of construction on their new home.
• Accounting entry: Debit Cash $10,000, Credit Accounts Receivable $10,000.

Transaction 5:

• Description: Paid $2,500 in rent for the company office.
• Accounting entry: Debit Rent Expense $2,500, Credit Cash $2,500.

Transactions and Costs Not Directly Seen on the TV Show

There are a number of transactions and costs that would not be directly seen on the TV show “This Old House.” These include:

• Salaries and benefits for administrative staff: The TV show does not show the cost of salaries and benefits for administrative staff, such as accounting staff, human resources staff, and marketing staff.
• Office supplies and expenses: The TV show does not show the cost of office supplies and expenses, such as paper, pens, and toner cartridges.
• Insurance: The TV show does not show the cost of insurance, such as liability insurance and workers’ compensation insurance.
• Taxes: The TV show does not show the cost of taxes, such as income taxes and property taxes.

How to Record Transactions

To record transactions, you will need to use a journal and a ledger. The journal is a chronological record of all of your transactions. The ledger is a summary of your transactions by account.

To record a transaction in the journal, you will need to enter the following information:

• Date
• Description of the transaction
• Account names and amounts
• Debit or credit

Once you have recorded the transaction in the journal, you will need to post it to the ledger. To post a transaction to the ledger, you will need to enter the following information:

• Date
• Account name
• Amount
• Debit or credit

Accounting Software

Accounting software can make it much easier to record and track your transactions. There are a number of different accounting software programs available, so you can choose one that is right for your business.

Conclusion

Accounting is essential for any business, including custom home building businesses. By understanding the different types of costs involved and how to record transactions, you can ensure that your business is financially successful.

Discussion Question Two

Here is an article from the Harvard Business Review that discusses the importance of accounting for healthcare companies:

[Article Title] Accounting for Healthcare Companies: A Guide to Financial Reporting and Analysis [Author] David A. Garvin, Michael G. Kaplan, and H. Thomas Johnson [Source] Harvard Business Review, March-April 1993

The article discusses the unique challenges that healthcare companies face in accounting. One of the biggest challenges is that healthcare companies often have long-term contracts with insurance companies. This can make it difficult to recognize revenue and expenses in a timely manner.