Source: Facebook

HELP: STUPID ACCOUNTING QUESTION – PROJECT ACCOUNTING

Costs, Expenses and ‘Floats’.

1) A cost is something that does not get consumed in the process of producing revenue.

2) An expense is something that does get consumed in the process of producing revenue.

3) A project expense (a ‘float’) is neither an expense nor a cost, but a loan from the company to the customer, which is billed to the customer as if it is revenue.

Now, given that in project accounting, one can be reimbursed (float), or one can bear the expense (expense), but rarely if ever bear a cost, what is the proper sequence for booking transactions?

In the states we book project expenses as revenue, even though it distorts both revenue and profitability. In the international market, I’m not sure I understand how this is generally done.

I actually should know this and I don’t, or I’ve forgotten.

Thanks in advance.