---
title: "Project Accounting and Job Costing"
sidebarTitle: "Project accounting"
description: "How job costs and revenue flow through WIP and deferred revenue, and how to close out jobs at period end so revenue and expenses land in the same month."
icon: "helmet-safety"
---

> **For AI agents:** the complete documentation index is at [llms.txt](/llms.txt). Append `.md` to any page URL for its markdown version.

| Field | Value |
|---|---|
| **Owner** | Unassigned — needs an owner |
| **Department** | General Accounting |
| **Effective date** | Not set in source |
| **Scope** | Project (job) accounting in Sage Intacct — how costs and revenue accumulate on the balance sheet during a job, and the period-end close-out that moves them to the income statement. Each client has specific reports and processes for the close-out entries; the concepts here are common to all. |
| **Source** | `General Accounting/09 - Project Accounting/Project Accounting.docx` |

Project accounting tracks financials for specific projects. It's used in construction, engineering, consulting, software development, and research — anywhere work is organized into distinct projects.

<Info>
  **The key principle:** post all revenue and expenses for each project to the income statement **in the same month**. Everything else in this procedure exists to serve that goal.
</Info>

## Features of project accounting

| Feature | What it does |
|---|---|
| **Project-specific tracking** | Revenue, costs, labor, materials, and overheads are tracked per project rather than only company-wide. |
| **Budgeting and forecasting** | Each project has its own budget and timeline, monitored for whether it stays within budget and on schedule. |
| **Time and expense tracking** | Labor hours, contractor work, and billable expenses are assigned to the correct project. |
| **Revenue recognition** | Determines when and how to recognize revenue, especially for long-term contracts (for example, percent-complete method). |
| **Reporting** | Project P&L, budget vs. actual, and work-in-progress reports. |

## Key terms

| Term | Meaning |
|---|---|
| **Jobs / Projects** | A temporary, unique initiative with a defined beginning and end, undertaken to create a specific product, service, or result — for example a builder constructing a residential home. |
| **Open jobs** | Currently active or ongoing. Costs are still being incurred and a final bill has not been sent. |
| **Closed jobs** | All work finished, all costs recorded, and the customer final billed. |
| **Cost codes** | Codes representing industry-specific segments that group totals under the project. A home builder would use framing, drywall, windows, flooring. |
| **Work in process (WIP)** | The balance sheet **asset** account where all costs for open jobs are posted — project costs started but not yet finished. |
| **Loan draws** | Money the client requested from a lender against an approved loan. As costs are incurred the lender increases the loan balance and deposits funds. Recorded as **liabilities**. |
| **Deferred revenue** | All money received for an open job — generally loan draws from a bank or earnest money from the customer. Recorded as **liabilities**. |

## Reports

| Report | Purpose |
|---|---|
| **WIP report** | All open projects and the WIP amount for each. **The total must tie to the GL balance.** |
| **Deferred revenue report** | All open projects and the deferred revenue for each. **The total must tie to the GL balance.** |
| **Budget vs. actual** | Project budget, costs incurred to date, and the variance. |
| **Job cost report** | Job costs summarized by cost code. |
| **Job draws report** | Job draws and WIP per project, calculating whether the job is over- or under-drawn. For some clients current month expenses are broken into a separate column. Used to determine the amount a client needs to request from a lender to pay expenses. |
| **Job detail report** | A GL detail report for the job, often grouped by cost code. |

## How costs and revenue accumulate

The general rule: **all job costs post to WIP, and all job revenue posts to deferred revenue.** The WIP and deferred revenue reports are reviewed at period end to determine what moves to the income statement.

### Job costs through AP

Job tracking starts as invoices are submitted through the weekly AP batch.

<Warning>
  **Clients are responsible for noting the job (for example `SSC9768`) and cost code (for example `13-MAIL`) on each invoice.** Manual checks and ACH payments are recorded the same way. Without the job and cost code, the cost cannot be assigned.
</Warning>

All job costs are posted as **debits to WIP** by the AP processor.

<Frame caption="A job cost posted to WIP from an AP invoice">
  <img src="/images/accounting/project-accounting/image1.png" alt="Sage Intacct AP invoice coded to a job and cost code" />
</Frame>

### Job costs through the credit card import

Some job costs come through the credit card import. The client should designate any job-related costs by providing the job and cost code. These post as a **debit to WIP**.

<Frame caption="Job costs entering through the credit card import">
  <img src="/images/accounting/project-accounting/image2.png" alt="Credit card import with job and cost code assignment" />
</Frame>

### Deposits

Deposits recorded from the bank rec are entered as **liabilities**:

- **Loans** → credited to loan draw liabilities
- **Payments from customers** → credited to liability accounts such as earnest money, deferred revenue, or job draws

## Period-end close-out

<Warning>
  **Close out jobs as the last step of the period close.** All AP must be entered, the credit card reconciled, the bank recs completed, and loans tied out first — otherwise close-out entries are made against incomplete cost and revenue data.
</Warning>

As part of period end, the client provides a list of jobs closed during the month.

<Steps>
  <Step title="Confirm the prerequisites are complete">
    Before making any close-out entry, confirm:

    - All AP is entered
    - The credit card is reconciled
    - The bank reconciliations are complete
    - Loans are tied out
  </Step>

  <Step title="Close out WIP">
    Run a report out of Intacct for the closed jobs giving the total of all costs for each job. Then make the entry:

    ```
    Dr. Cost of Sales (P&L)
    Cr. WIP (B/S)
    ```

    <Frame caption="The WIP close-out entry">
      <img src="/images/accounting/project-accounting/image3.png" alt="Journal entry closing WIP to cost of sales" />
    </Frame>
  </Step>

  <Step title="Close out deferred revenue">
    Run a report out of Intacct for the closed jobs giving the total revenue for each job. Then make the entry:

    ```
    Dr. Deferred Revenue / Loan Draws / Earnest Money (B/S)
    Cr. Job Revenue (P&L)
    ```

    <Note>
      Each client has specific reports and processes for these entries, but the concept is identical across clients.
    </Note>
  </Step>

  <Step title="Update the project status">
    Change the project status from **open** to **closed**.

    Go to **Accounts Receivable → Set-Up → Projects**. Find the project in the list and click **edit**. Enter the month-end date for the month the project was closed, and change **Project Status** to **closed**.

    <Frame caption="Updating project status and close date">
      <img src="/images/accounting/project-accounting/image4.png" alt="Sage Intacct project status and date fields" />
    </Frame>

    <Tip>
      These two fields affect several reports in Intacct and are what allow filtering and searching historical information later. Setting the status without the date, or vice versa, breaks that.
    </Tip>
  </Step>

  <Step title="Tie the WIP report to the GL">
    Run the WIP report for open jobs and tie it out to the GL balance.

    <Frame caption="Tying the open-jobs WIP report to the GL balance">
      <img src="/images/accounting/project-accounting/image5.png" alt="WIP report tied to general ledger balance" />
    </Frame>

    **If WIP doesn't tie**, the most common cause is expenses for jobs closed in prior periods being coded to WIP. Run the WIP report for **all** jobs to identify where the issue is. Any costs for closed jobs sitting in WIP must be reclassified to a cost of sales account on the income statement.
  </Step>

  <Step title="Tie deferred revenue to the GL">
    Follow the same process for deferred revenue. Run the summarized report for each GL — deferred revenue, loan draws, and so on — and tie each to its GL balance. Review variances, and most likely reclassify them to the income statement.

    <Frame caption="Tying deferred revenue reports to their GL balances">
      <img src="/images/accounting/project-accounting/image6.png" alt="Deferred revenue report tied to general ledger balance" />
    </Frame>

    **Expected outcome:** WIP and deferred revenue reports for open jobs both tie to their GL balances, and all closed-job costs and revenue sit on the income statement in the month the job closed.
  </Step>
</Steps>

## Summary of entries

| Transaction | Debit | Credit |
|---|---|---|
| Posting AP invoices | WIP (B/S) | Accounts Payable (B/S) |
| Posting credit card transactions | WIP (B/S) | Credit Card Payable (B/S) |
| Manual checks | WIP (B/S) | Bank Account (B/S) |
| Deposits from loans | Bank Account (B/S) | Loan Draws Payable (B/S) |
| Deposits from customers | Bank Account (B/S) | Deferred Revenue or Earnest Money (B/S) |
| Close-out WIP | Cost of Sales (P&L) | WIP (B/S) |
| Close-out deferred revenue | Deferred Revenue or Earnest Money (B/S) | Job Revenue (P&L) |

## Related documents

- [Financial analysis](/internal/sops/accounting/general/financial-analysis) — the balance sheet verification that WIP and deferred revenue are supported
- [Intacct bank reconciliation](/internal/sops/accounting/general/intacct-bank-reconciliation) — where loan draws and customer deposits are recorded
- [Day-to-day AP transactions in Sage Intacct](/internal/sops/accounting/ap/intacct-ap-transactions) — entering job-coded invoices