Florida General Contractor Practice Exam

What does the contractor's purchase journal record?

1. Total revenue from projects

2. Total charge purchases

3. Total expenses incurred

4. Total assets owned

The correct answer is: Total charge purchases

The contractor's purchase journal specifically records total charge purchases made by the contractor, which includes all transactions where goods and services have been acquired on credit. This journal is critical for managing accounts payable as it helps contractors keep track of what they owe to suppliers and subcontractors for materials and services purchased. Unlike other financial tracking methods, the purchase journal focuses solely on purchases related to the operational activities necessary for completing projects, rather than total revenue, expenses, or assets. Understanding this function is essential for maintaining accurate financial records and ensuring cash flow management within a contracting business.