Job Costing
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How is Job Costing Different from Regular Accounting?

General accounting uses the general ledger with subledgers, such as accounts payable, accounts receivable, and payroll. When there is a budget for expenses, it is based on the general ledger. When job costing is used, general ledger expenses are budgeted also, BUT job expenses are budgeted individually, job by job, phase by phase, line by line, using cost codes, not the general ledger. What shows on the general ledger are totalled costs for labor, materials, equipment, subcontracts, and other costs. The details of these job costs are tracked in the job costing module, similar to the way details are tracked for accounts receivable, payable, etc.

While it is conceivable that one could use the general ledger to track job costs, it would require a complex, ever expanding chart of accounts to separate and track jobs. A set of numbers would need to be added to the general ledger with every new job. Job costing software simplifies the process by tracking job costs within a job costing module.