The most important accounts needed for the accounting treatment of real estate investment with application to the real estate investment program
What are the most important accounts that I can use in managing real estate investment activity, and does the use of real estate investment accounting software affect the form of accounts?
What are the limitations of the real estate investment cycle?
When we admit the revenue in the real estate investment activity? Is there more than one way to admit revenue in this activity?
This article is the first series of articles in which we will discuss in detail the stages of the accounting cycle and the documentary of the real estate investment companies and the accounting treatment through daily application with the restrictions on Accflex accounts program integrated real estate investment program
Before we are exposed to the accounting treatment of the real estate investment cycle, let us first get to know the most important accounts that we may need to be coded in the accounts guide as a real estate investment company, whether we are working with a ledger system or through a real estate investment program, this of course regardless of the basic accounts that can be used by any company, whatever is the nature of its activity
If we don't know any account directory or accounts tree, and how to do it, you can read the article that explains the importance of the accounts guide in building the accounting system for any company and how to operate an integrated accounts directory.
returning to our subject, the most important accounts that can be used eventually to implement an integrated accounting cycle using a real estate investment?
First: Business account in progress
Business account in progress is among the current assets accounts, as we use it mainly because we were a real estate investment company or a contracting company, so the account we use to prove in it all the work that we do in order to build and construct various projects, to evaluate a project from the foundation we need some works such as business digging, preparation, construction works, finishing works and other works necessary to establish the project, and we prove the cost of these works in the account of work in progress in the current assets and this is because it is not an expense but rather a work cost until the sale is known as an expense
And of course,the Business account in progress Is A main account from which other terminal accounts are branched, meaning that it is possible, for example, to have a main account called a work in progress account and a separate branch of it for each project, for example the New Administrative Capital project, and under each project we start by branching its business independently. Each type of business is in the private account, but if you work on the real estate investment program, we can unify business items without projects In addition these items are linked to the cost centers directory, meaning that in the end, one joint accounts are linked to all projects and with a movement that takes place on the real estate investment program. The movement is attached to a specific project or a specific cost center
.. This is a model for the form of a business account in progress and its branches in the accounts guide in the Accflex accounts program, one of the parts of the integrated real estate investment program.
Second: Calculating customer down payments
The account of advances to customers is One of the accounts of circulating commitments or current liabilities, and is mainly used in any Deals that take place on a specific client until the unit subject to the contract is delivered and then we close it in the customer’s account present in the current assets, and from here we conclude that the customer has two accounts in one of the commitments. It is called advance payments in which the installments collection operations are proven until the unit is delivered to the customer, and this amount represents our commitment as a real estate investment company until the delivery is made to the customer & The second is the customer’s account itself, in which the down payments account is closed.
Therefore, in the Accflex real estate investment program, two accounts are created for the customer, an account for advance payments in liabilities, and another account in assets.
Third : operations costs account
Or operating expenses Whatever the name is, It is denoted to calculate the cost of sales that we use in normal business.
This account will be among the expenses items in the chart of accounts and is used in the case of selling the unit only because the point of recognition of revenue in the real estate investment activity is the delivery of the unit to the customer, and therefore I will not recognize any cost other than after the unit is delivered to the customer.
This account is similar in its composition to a business in progress account, which mean that it will be a main account from which the business is branched out. The terminal accounts related to costs are roughly the same as business in progress accounts
Fourth: sales revenues account
Of course we all know the sales revenue account we use it in case of selling and delivering the unit subject to the contract, and the revenues in general in the real estate investment activity are Revenues from the main activity are often:
1- A complete unit sales revenue account, and it may be subdivided according to the type of units we sell.
2- utilities Income account
3-. rental income account
examples for Other revenues.
1- Installment interest income
2- Delay fines for clients.
3- Fines Cancel Booking
4- Various revenues
In the real estate investment program, revenue is processed when the unit is finally delivered to the customer, and consequently the ownership and risk with it is completely transferred to the owner.
This is the revenue form in the accounts on the general Accounts Program
Thus, we will be exposed to the most important accounts that should be used to implement an integrated accounting treatment for real estate investment activity with the application to the real estate investment program Accflex and the general accounts program, and through the next article, we will be exposed to the stages of the accounting cycle through the daily entries