Utah Contractor Practice Exam

Which two methods are considered the best for tracking job expenses?

1. General ledger and payroll journal

2. Payroll journal and expense journal

3. Expense journal and general ledger

4. General journal and general ledger

The correct answer is: Payroll journal and expense journal

The best methods for tracking job expenses are through the payroll journal and the expense journal. The payroll journal specifically records all expenses related to employee compensation, such as wages and benefits. This is crucial for understanding labor costs associated with specific jobs and helps in budgeting and forecasting future projects. The expense journal, on the other hand, captures all other job-related costs, including materials, subcontractor fees, and overhead expenses. By maintaining an accurate record of these expenses, contractors can assess the overall financial health of each project, ensuring they remain within budget and can identify any areas where costs may be exceeding projections. Combining the detailed information from both the payroll journal and expense journal provides a comprehensive overview of total job expenses, enabling better financial management and decision-making. This integrated approach is essential for successful project management in construction and contracting.