Construction Accounting and Financial Management, 4th Edition Solution Manual by Steven J. Peterson, Verified Chapters 1 - 18, Complete Newest Version

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SOLUTION MANUAL uu




Construction Accounting and Financial Management,
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4th Edition Steven J. Peterson
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Chapters 1 - 18, Complete Newest Version
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CONTENTS
New to the Fourth Edition
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Chapter 1: Construction Financial Management
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Chapter 2: Construction Accounting Systems
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Chapter 3: Accounting Transactions
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Chapter 4: More Construction Accounting
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Chapter 5: Depreciation
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Chapter 6: Analysis of Financial Statements
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Chapter 7: Managing Costs
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Chapter 8: Determining Labor Burden
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Chapter 9: Managing General Overhead Costs
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Chapter 10: Setting Profit Margins for Bidding
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Chapter 11: Profit Center Analysis
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Chapter 12: Cash Flows For Construction Projects
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Chapter 13: Projecting Income Taxes
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Chapter 14: Cash Flows for a Construction Company
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Chapter 15: Time Value of Money
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Chapter 16: Financing a Company’s Financial Needs
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Chapter 17: Making Financial Decisions
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Chapter 18: Income Taxes and Financial Decisions
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New to the Fourth Edition uu uu uu uu




The major changes to the fourth edition include the following
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 The business failure rate for construction companies in Chapterj 1
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have beenupdated.
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 Sections on cost segregation and bonus depreciation have been added to Chapter
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 The discussion of typical median ratios in Chapter 6 has been updated.
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 A section on the monitoring and controlling process has been added to Chapter 7.
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 A section on managing design-build costs has been added to Chapter 7.
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 The wages, social security, and Medicare costs were updated in
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Chapters 8, 9,and 14.
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 A weekly cash flow problem has been added to Chapter 12.
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 The income tax regulations in Chapter 13 have been updated to
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incorporateprovisions of The Tax Cuts and Jobs Act passed in
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December 2017.
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 The project cash flows used to develop an annual cash flow for a
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construction company have been expanded to cover the entire
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project (including work done inthe prior year) and the calculation of
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the underbillings/overbillingsj has been included in Chapterj 14.
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 The effects ofj taxes on decision has been updated in Chapterj 18
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to incorporate theTax Cuts and Jobs Act.
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The Instructor’s Manual includes a list of learning objectives, instructional hints,
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suggested activities, and resources forj each chapter. Files for the figures and tables
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in the textbook are found on the instructor’s website. It is my hope
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that these resources will make it easier for course instructors to teach the
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material in a
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textbook are quite diverse, it is impossible to organize the chapters into one
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best order. Each instructor should consider his or her individual program and
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determine which chapters need to be taught and in what order.
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Best wishes, uu




Steven J. Peterson, MBA, PE uu uu uu uu




Chapter 1: Construction Financial Management uu uu uu uu




Learning Objectives uu




At the completion of this chapter the student should be able to:
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 Explain why financial management is so important to a construction company.
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 Explain why financial management is different for construction companies
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than formost other industries.
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 Understand that all managerial employees from the owner to the crew
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forepersonplay a role in financial management ofj a construction
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company.
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Instructional Hints uu




 Compare a construction company to a manufacturing plant. Emphasize the
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differences between a construction company and a manufacturing plant,
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particularly: construction companies build unique products and the
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equipment isnot usually stationary at single location. These are the
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reasons a construction company needsj a job cost system and an
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equipment cost system.
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Activities
 Invite a financial manager (for example, an accountant or general
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manager) from aconstruction company to your class to discussj their role
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as a financial manager.
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 Have each student interview a management employee forj a construction
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company.The interviews should include owners, project managers,
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superintendents, and forepersons. Each student is to find out how the
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employee contributes to the financial management of the company.
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Discuss their findings in class.
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Instruction Resources uu




 The figures from this chapter in electronic format and PowerPoint
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slides can befound at the instructor’s website.
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 Data on construction failures can be obtained from the Surety
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Information Office(www.sio.org).
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 Current data on construction company failures can be found atj
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http://www.census.gov/ces/dataproducts/bds/data_firm.html. The most
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useful datacomes from reports that include the sector (e.g., Sector, Firm Age
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by Sector, and Firm Size by Sector) because construction can be separated
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from other industries.
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Solutions toj the Textbook Problems
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1. They are: 1) ineffective financial management systems, 2) bank line
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ofj creditsconstantly borrowed to the limits, 3) poor estimating
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and/or job cost reporting,
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4) poor project management, and 5) no comprehensive business plan.
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