A partner at Greene & Company, LLP, of

Melville, NY, Adam Greene, CPA, and his

firm have provided accounting services for

the construction industry for more than two

decades. Adam Greene, CPA, is well-versed

in the accrual method as it applies to this

area of accounting.

Construction companies choose an accounting method for their business depending on the kinds of contracts they possess, the completion status for said contracts, and their average yearly gross receipts. In addition, construction companies usually use two accounting methods for their business. One method is used for long-term projects while another is utilized for any other income and costs that are incurred during the year.

Selecting the proper accounting method is

essential as it impacts how a company reports

its income and deducts its costs. Most

construction companies are smaller-sized and

therefore utilize the accrual method of

accounting for their overall accounting needs.

When this method is used, a contractor’s

income is recorded upon the sale of a product

or service regardless of when the payment is

made.