17-Project Accounts - Project Accounts Dr. Hesham A. Aziz 1...

Info iconThis preview shows pages 1–7. Sign up to view the full content.

View Full Document Right Arrow Icon
Project Accounts 1 Dr. Hesham A. Aziz Dr. Hesham A. Aziz
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Key Points : - Statistics clearly indicate that more companies go into liquidation because of cash-flow problems than for any other reason . Negative cash-flow need to financed well in advance . The cost S curve forms the basis of the earned value calculation 2 Dr. Hesham A. Aziz
Background image of page 2
The financial success of a project depends not only on the project making a profit, but also financing the project through the project life-cycle . Statistics clearly indicate that more companies go into liquidation because of cash-flow problems than for any other reason. Project accounting should not be confused with financial accounting or management accounting which are used within the corporate environment . 3 Dr. Hesham A. Aziz
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Financial Accounting : Keeps a record of all the financial transactions, payments in and payments out, together with a list creditors and debtors. The three main reports are; the balance sheet, the income statement and the cash-flow statement . Management Accounting : Cost accounting, uses the above financial information particularly from the profit and loss account to analyze company performance. This analysis will assist management decision-making with respect to estimating, planning, budgeting, implementation and control . Project Accounting : Uses a combination of both financial accounting and management accounting together with some special project management tools ( WBS, CPM and earned value ) to integrate the project accounts with the other project parameters . 4 Dr. Hesham A. Aziz
Background image of page 4
1. Cash-flow Statement The cash-flow statement is a document which models the flow of money in and out of the project . The cash-flow statement is based on the same information used in a typical bank statement, except that here the income ( cash-flow ) and expenditure ( cash-flow ) are grouped together and totaled . The client’s income would come from the operation of the facility ( after the project has been completed ) and the expenses would be the invoices from the sub-contractors and suppliers . 5 Dr. Hesham A. Aziz Cash flow = Cash in – Cash out = Income - Expense
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Step 1: Set up the cash-flow statement headings . Step 2 : The brought forward ( B / F ) for January is given at $ 5,000 . Step 3 : List the inflow of cash items from the income statement for January, February and March, $ 10,000,$ 15,000 and $ 20,000 respectively . Step 4 : Calculate the total funds available for January by adding the total income to the brought forward amount . Step 5 : List the outflow of cash items form the expense statement for January, February and March, $ 8,000, $ 12,000 and $ 16,000 respectively . Step 6 :
Background image of page 6
Image of page 7
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 47

17-Project Accounts - Project Accounts Dr. Hesham A. Aziz 1...

This preview shows document pages 1 - 7. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online