A works contract is an agreement which is a mixture of service or labour and transfer of goods thus, an agreement of building construction, manufacture, processing, fabrication, installation and repair or commissioning of any movable or immovable property, is a works contract.
Below are the steps on how to maintain contract accounting in Book Keeper.
Let's take example, ABC School has given us a contract to construct a building. To maintain this contract in Book Keeper, kindly follow below steps.
1. You need to create your company, Open Book Keeper > click on Create New Company > enter company details, enable Manufacturing & Warehousing and Save.
2.Create 3 inventory items Brick, Cement, ABC School Building.
You can create Inventory Item under:
Inventory Item > New Inventory Item
3. You need to create Warehouse/Site which will we used as the place from where you will get your contract.
Create ABC School Site warehouse.
You can create Warehouse under:
Warehouse > Create New Warehouse.
You can also change heading of warehouse under:
Settings > Template Settings > Item Table > Warehouse, you can change heading to 'Site'.
4. You need to create the Accounts with which you deal e.g. Supplier, Customer.
Create 2 Accounts:
a. ABC School > Keep Account Type as Sundry Debtors.
b. Bajaj Traders > Keep Account Type as Sundry Creditors. You purchase raw materials from them.
5. Now you need to create Purchase Voucher for purchase of raw materials (cement & brick).
6. Create Inventory Transfer transaction to move raw materials from Main Location to ABC School.
Transaction > Inventory Transfer > Create, Now in Destination Site select ABC School Site.
Select your item and select Source Site as Main Location.
7. Now you need to Manufacture the item for which you have got the contract i.e. ABC School Building. For this, we will create Manufacturing Journal
Go to Transactions > Manufacturing Journal > Create.
In Consumed Items, you need to select Brick and Cement.
In Manufactured Items, you need to select ABC School Building.
You can add all the expenses that were incurred while manufacturing in Manufacturing Expenses.
Now you have created the ABC School Building, you can raise a Sale Invoice against your Customer.
8. Create Sales Invoice and add ABC Building Item in it and save it.