In the future, I aspire to become a construction project manager. Some of the roles that I will execute in this position will include negotiating cost estimates, creating site budgets and developing work timetables among others. Additionally, it is evident that most of the roles that I will undertake in this position will involve financial transactions, which must be handled with care to ensure that all operations of the business run seamlessly. As such, the knowledge of financial accounting will be essential for the construction project manager’s role. Moreover, this is because, through financial accounting, the manager can attain the skills of proper allocation of funds, which is imperative in securing operational efficiency. Ultimately, through proficiency in financial accounting, as a construction project manager, I will be able to make sound financial decisions and also support the attainment of other financial business concerns. This research will provide a connection between financial accounting knowledge and responsibilities and the role of a construction project manager and also apply the connection to an imaginative management scenario in an organization.
Financial Transactions Encountered By a Construction Project Manager
Purchase transactions are the first form of transactions that will be encountered when taking the role of a construction manager. Additionally, these are transactions that will be required by the construction corporation, so as to obtain raw materials, like cement, ballast, and metal rods etc., which are essential for the company’s functions. In this case, the construction manager will be involved in writing materials requisitions among others. Payments are the second form of transactions that will be encountered by the construction project manager while executing his roles. Additionally, there will be transactions that will involve the receiving of payments by the company for services done its construction project.
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For instance, after the first phase of the construction has been completed, an organization can receive the first payment for the work done. In this case, the construction project manager will be involved in determining that the reconciliation of the company’s financial records have been executed and all payments for the work done issued to the organization. Ultimately, credit transactions are the last form of transactions that will be encountered by the construction project manager when executing his roles. Additionally, credit transactions in the construction company will occur when the organization obtains raw materials for building on credit, to be repaid at a future date. In this case, the construction project manager will be involved in signing off all the reconciled records of credit purchases by the company before the suppliers can be paid by the company.
The Relationship between the Transactions and the Success of the Construction Business
The three forms of transactions stated have a direct relationship with the success of the construction company where the construction project manager will work. First, the purchases transactions will affect the balance sheet through reducing the cash account and at the same time elevating the fixed assets account in the construction firm (Stickney, Weil, Schipper, & Francis, 2009) . Nevertheless, it will have no effect on the income statement. On the other hand, payments transactions will affect the balance sheet by increasing the debt in the liability account and also increasing the organization’s credit account (Singh, 2016) . However, it will have no effect on the income statement. Lastly, the credit transactions will affect the balance sheet by increasing the amount of current liabilities account (Asian Development Bank, 2013) . Nevertheless, credit transactions will not affect the company’s income statement. Moreover, for the success of the construction company, the organization’s purchases and payments transactions will have to be at par or less than the budgeted amount by the organization. Lastly, the organization will also have to ensure that the credit transactions will not be more than the funds budgeted for the implementation of the project.
Application to a Scenario
In the event cash accounting errors in an organization have been made by a predecessor, it would be imperative to address such problems using a comprehensive financial analysis. In this case, the first step would be to analyze the balance sheet and income statements using records of receipts attained by the organization. Additionally, the analysis of journal entries can be performed to investigate errors of omission, commission, principle, original entry and reversal of entries. Additionally, the creation of suspense accounts for the journal entries should also be created in an effort to determine and provision for the differences observed in the company’s books of accounts. Moreover, the suspense accounts can also be employed in checking additional errors, posting errors, trial balance errors and compensating errors. Ultimately, such measures can be effective in illustrating any type of errors recorded in the organization’s books of accounts.
Conclusion
In conclusion, having the proficiency in financial accounting as a construction project manager can help an individual to make sound financial decisions and also support the attainment of other financial business concerns. Additionally, some of the financial transactions that are encountered by a construction project manager purchase, payment, and credit transactions. Moreover, purchases transactions can affect the balance sheet through reducing the cash account and at the same time elevating the fixed assets account. Contrary, payments transactions affect the balance sheet by increasing the debt in the liability account and also increasing the organization’s credit account. Lastly, the credit transactions affect the balance sheet by increasing the number of current liabilities account for the organization.
References
Asian Development Bank. (2013). ADB Financial Profile 2013. Manila: Asian Development Bank.
Singh, S. K. (2016). Accountancy: E-Book. Uttar Pradesh: SBPD Publications.
Stickney, C. P., Weil, R. L., Schipper, K., & Francis, J. (2009). Financial Accounting: An Introduction to Concepts, Methods, and Uses. Boston: Cengage Learning.
