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Learn how to prepare the abstract step by step



Learn how to prepare the abstract step by step

How to prepare the abstract and accounting guidance step by step

In this article we will learn about the accounting guidance of the business abstracts and how to deal with the deductions that are made on the abstract such as ( guaranteeing the business - the reserved amounts - the taxes whether the deduction tax and addition - VAT - social insurance - advance payments - bank loans or supply of materials from a supplier)

Abstracts submitted to the owners or business owners are considered revenues of the company value of the executed works

For example, assuming that the Ministry of Transport and Communications has been contracted to implement the terms of work of the sewage project south of the airport, the engineer in charge of the project will prepare a summary of the items that were implemented during a specific period from …to

Work steps:-

1 - The period must be carefully defined because the extracts are cumulative in the sense that the periods are consecutive and we note from the figure that the period from 1/12/2015 to 22/12/2015 Abstract #2 will be paid after 22 /12/2015

2 - Identify the customer and the main cost center and branch

3 - Recording the current quantities carried out during the period

4 - Registration of deductions and deductions on the abstract

5 - Preparation of the accounting guidance of the extract of the form notes that the value of the works implemented for extract 1# is 300,050$

Business Abstract No. 1 Ministry Of Transport And Communications

We will explain step-by-step in the deductions, deductions and possibilities that confront us with the accounting guidance of each case

The accounting guidance of the abstract in the simplest case


1- Assuming that 5% business guarantee is deducted, 10% discount payments are deducted and 3% deduction is deducted. Since the business insurance and the amounts saved are recovered at the end of the project, a separate account must be opened for each of them to be monitored while the advance payments are already received at the beginning of the project and are refunded In batches deducted from the value of each outlet at agreed rates


Accounting guidance upon receipt of advance payments


How to calculate the guarantee of the business and the works and the payments made to the abstract?

  • Business Assurance = (Value of current abstract work) × Agreed rate 5%
  • Prepayments = (Value of current abstract work - business guarantee) x 1 Agreed rate 10%
  • Business absenteeism = (The value of the current abstract work - business guarantee) x 1 Retained ratio 3%

The accounting guidance of the abstract includes discounts


2- Assuming that there are deductions on the abstract as penalties or fines such as the implementation or deductions of government agencies such as (stamp fees - engineering fees )

the accounting guidance in this case there are two directions:-

  • There are those who see that the revenue is reduced by the value of discounts
  • And the other opinion is to download the discounts on a separate item in the expenses of the process to be able to know the size of discounts and fines that were loaded on the project and we in Babylon work in this direction

Accounting guidance for deductions in the abstract



3- Assuming that the value added tax was deducted 1% Note that the tax is the debt of the value of the tax deducted since the prices provided by our company including taxes in this case taxes will be debited with the value deducted from the source while if prices are not inclusive tax will be a credit

Accounting guidance for taxes in the abstract



4- In some cases, loans are obtained from banks with the guarantee of abstracts. There are some facilities provided by the suppliers and agreement on the supply of materials for the work site, provided that the supplier's dues are deducted from the executed extracts at agreed rates with the owner and the executing company, From the value of the extract to the supplier of advanced pipe enterprise


The accounting guidance for the supply of materials with the guarantee of the extract




Note that the income account is constant in all transactions but the variable account is the value of the receivable on the client or the owner and the net receivable of the customer is 187,140$


The final form of the extract showing all the data



Through the Babel accounting program for contracting and from the summary screen 

shown above, the accountant or the official to determine the data from the items of business and discounts, deductions and taxes and the program automatically accounting guidance


To ask about any unclear points, you can email us or leave your comments      Info@Babelsoftco.Com 


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