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Construction Management Program > Finance in Construction Management > Flashcards

Finance in Construction Management Flashcards

1
Q

Who is an elected group of people who represent the interests of a company’s stakeholders?

A

Board of Directors

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2
Q

What does the Board of Directors do?

A

They meet regularly to determine the organization’s guiding principles, select top managers, and oversee policies for the business.

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3
Q

What is a Chief Executive Officer (CEO)?

A

The CEO is the ultimate decision-maker who reports to the Board of Directors.

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4
Q

What does a CEO do?

A

A CEO maximizes company value and achieves company goals.

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5
Q

What is a Chief Operation Officer (COO)?

A

The COO is the second-in-command who oversees daily administrative and operational functions.

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6
Q

What does a Chief Financial Officer (CFO) do?

A

A CFO manages all financial aspects of a business (bonus: which includes cash flow, taxation, financial reporting, and financial planning).

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7
Q

What does a Chief Information Officer (CIO) do?

A

The Chief Information Officer typically reports to the COO and manages information technology and computer systems in a business.

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8
Q

What does a Chief Investment Officer do?

A

The Chief Investment Officer manages the company’s assets and portfolio.

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9
Q

What does an Executive Senior Vice President do?

A

An Executive Senior Vice President reports to the CEO and oversees a specific department or region.

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10
Q

Who establishes strategies to earn profits, oversees accounting functions, produces accurate reports, and improves practices to increase efficiency?

A

Director of Finance

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11
Q

Who provides independent evaluations on the effectiveness of controls and is responsible for processes and controls?

A

Internal Auditor

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12
Q

Who maintains and improves a company’s financial standing, assesses risk, determines funding requirements, and advises on funding and investment opportunities?

A

Treasurer

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13
Q

Who plans, forecasts, budgets, and analyzes data support for business decisions?

A

Financial Planning & Analysis (FP&A) Manager

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14
Q

Who oversees daily accounting operations, including AP, AR, payroll, and first point of contact for the accounting team?

A

Controller

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15
Q

Who prepares, manages, and distributes periodic financial statements, and complies with government regulations, professional standards, and/or filing authority guidelines (GAAP/IRFS/ASPE)?

A

Financial Reporting Manager

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16
Q

Who is in charge of receiving invoices, handling vendor inquiries, obtaining approval, processing payments, and releasing holdbacks?

A

Accounts Payable (AP) Specialist/Clerk

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17
Q

What does an IFRS stand for, and what is it for?

A

IFRS stands for International Financial Reporting Standards and is for publicly traded companies and private Canadian businesses.

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18
Q

What does ASPE stand for, and what is it for?

A

ASPE stands for Accounting Standards for Private Entities and is for private Canadian businesses.

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19
Q

Who prepares and posts customer payments, follows up on cash receipts from customers, reconciles the customer’s statement, updates the customer’s information, including name changes, billing changes, mergers, etc., and alerts the accountant and project managers regarding account deliquencies?

A

Accounts Receivable (AR) Specialist/Clerk

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20
Q

Who monitors progress claims, looks into variances in project billing vs. cost analysis, ensures timely billings and collections, maintains books’ accuracy, and manages bank reconciliation and monthly accruals?

A

Project Accountant

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21
Q

Who prepares various tax returns, assists in tax audits, liaisons with other team members on tax payments and refunds, and is in charge of GST, PST, payroll, and corporate?

A

Tax Accountant

22
Q

What is the accounting cycle?

A

AP cycle (invoice and payment) > AR cycle (billing and receivable) > month-end cycle (job cost and financial statement), reporting cycle, and year-end report.

23
Q

What is the purpose of a balance sheet?

A

A balance sheet summarizes the firm’s assets, liabilities, and equity (net worth).

24
Q

What is the purpose of an income statement?

A

An income statement details the firm’s revenues and expenses.

25
Q

What is the purpose of a cash flow statement?

A

The Statement of Cash Flow reports your firm’s sources and uses of cash.

26
Q

What is the purpose of creating POs prior to purchasing or committing work?

A

POs allow PM to monitor costs and budgets.

27
Q

Can we pay an invoice if they misspelled our legal name in it?

A

No, the invoice validity is pending on an accurate invoice.

28
Q

In this cycle,
1. We apply for credit and set up account
2. Trades perform work for us, and/or we make purchases
3. Invoices or progress claims from trades and vendors sent to accounting
4. Accounting processes data and sends to COO for approval
5. COO approves invoices
6. Cheques processed and payment(s) made

A

Accounts Payable (AP) Cycle

29
Q

In this cycle,
1. We set up primary contract and budget
2. Purchases, trades, PM work incurred
3. All expenditures and accountant allocate PM’s time
4. PM allocate monthly work-in-progress % and let accountant prepare initial billings
5. Accountant sends out the bills
6. COP (Certification of Participation) issued
7. Client makes payment

A

Accounts Receivable (AR) Cycle

30
Q

What is this cycle type?
1. Invoices and progress claims from trades and vendors
2. Job cost report
3. Cost of goods

A

Month-End Cycle

31
Q

What is this cycle type?
1. Cost plus progress billing
2. Billing for client
3. Revenue

A

Month-End Cycle

32
Q

What is this cycle type?
1. Monthly revenue & costs
2. Margins
3. Monthly overhead allocation
4. Bottom line (Final cost)

A

Reporting Cycle

33
Q

What is this cycle type?
1. Annual profit and loss report
2. Evaluate and write off bad debt
3. Head office fixed cost allocation
4. Bottom line and bonus
5. Forecast for revenue & costs and hiring needs for next year

A

Year-end report

34
Q

What are the implications of delays in processes?

A

◦ Trade payment and relationship
◦ Accuracy of job costs
◦ Billing delays
Bonus:
◦ Insufficient funds and impact on margin
◦ Inability to identify potential risk factors
◦ Pressures to keep a large accounting team to accommodate process inefficiencies

35
Q

What is a set of accounting standards that govern how particular types of transactions and events should be
reported in financial statements?

A

International Financial Reporting Standards (IFRS)

36
Q

What are some major differences between Accounting Standards for Private Entities (ASPE) and International Financial Reporting Standards (IFRS)?

A
  • Foreign exchange
  • Income taxes
  • Provisions
    Bonus:
  • Subsidiaries and consolidations
  • Impairment of non-financial assets
  • Joint arrangement and associates
  • Shared based payments
37
Q

What is a system containing transaction records that always impacts two different areas of the financial statement which each entry has to be equal?

A

Double entry system

38
Q

In revenue and collection, when billing out a customer, the entry is (1) and when the customer made a payment, the entry is (2)

A
  1. Debit Accounts Receivable and Credit Revenue
  2. Debit Cash and Credit Accounts Receivable
39
Q

When an invoice is received, the entry is (1) and when payment is made, the entry is (2)

A
  1. Debit expenses & job costs, and Credit accounts payable
  2. Debit accounts payable and Credit cash
40
Q

When borrowing funds from the bank, the entry is?

A

Debit cash and Credit Mortgage and loans

41
Q

What is a basis of accounting that recognizes when revenue is earned and expenditures are consumed?

A

Accrual basis

42
Q

What is a basis of accounting that recognizes all transactions based on the time when cash is exchanged?

A

Cash basis

43
Q

What is the quarter end that is driven by the fiscal year-end date?

A

Fiscal quarter end

44
Q

What is a worksheet that combines the balances of accounts and shows the debit and credit are equal?

A

Trial Balance

45
Q

What is a record of transactions of all accounts?

A

General Ledger

46
Q

What is a booking of activities that are recorded directly to the general ledger?

A

General journal entries

47
Q

What is a subset of the general ledger that will flow into the general ledger account?

A

Subledger

48
Q

What is a typical timeline for when financial statement needs to be ready so banks can review or audit them?

A

120 days past year end date

49
Q

What is a month end?

A

Month end is the end of each month of the fiscal year.

50
Q

What is equity?

A

Equity is the amount of an asset deducted by the amount of a liability.

51
Q

What is a job cost report?

A

It is a report that captures all the costs spent on a job, including general conditions, labour, material, contract, misc., and is linked to the financial statement.

52
Q

What are the steps of a revenue and AR report?

A
  1. The project accountant sends a draft revenue billing to the project manager to be reviewed.
  2. Project manager applies the appropriate progress claim %

Construction Management Program (7 decks)

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