We don’t use Project Jobs, but I did dig into it extensively in 2018, so I reviewed my notes from that.
So let’s back up a minute. This is going to seem unrelated.
Scenario 1 (ordinary job) - you make widgets by the thousands and receive them into to stock.
- Costs get charged to the job (they go into WIP)
- When the job is done, you do a Job Receipt to Inventory and those costs get received into inventory.
- Later you sell and invoice the part and costs go to sales
Scenario 2 (ordinary job) - you make parts to order and ship them out (you do not receive them to stock in the interim).
- Costs get charged to the job (they go into WIP)
- When the job is done, you do a Customer Shipment (from WIP, not from inventory) and those costs go to cost of sales
- Then you invoice and costs go to sales
Now your situation or something like it.
Scenario 3 (project job)- you construct huge commercial buildings, so you make a Project Job to accumulate random things (travel expenses, time for your own engineers to work on this)
- Costs get charged to the job (they go into WIP)
- And then what?
- There is no finished product to receive to inventory
- There is nothing to ship either
- It might be months or years before the project (small P) is finished
- In this case you do Project Revenue Recognition which puts costs straight to somewhere; cost of sales, I presume
- And then you might use milestone billing, for example, to move costs to sales
The point in all of these is the same - you need some mechanism to move costs from WIP to somewhere else - eventually to revenue.
Project jobs give you a different method to do this, one that accountants like for its ability to move on with life on a big project - to move costs even when the job is not complete yet.
Again, though, I am not an expert and that was 4 years ago, so if anyone else wants to chime in and correct me, please do.
Edits:
And we never implemented this. It was way too much of a hassle for us. Not to say it’s a bad idea, but we don’t have massive projects like that, for example.
Oh, and you can tie NON-Project jobs to a Project, too. We do that, for organizing reasons.
[Edited descriptions per later post]