I personally do not break out material and labor, doing that does not benefit me from an accounting standpoint. A good accounting system based on a sound chart of accounts like NAHB will do these transactions. If you have hourly employees who work on a job, their wages would be charged to that job within the asset account WIP, their payroll expense (FICA, Medicare) would be charged to the job using an expense account, with a matching entry in a liability account. Expenses are for overhead admin items like office rent, accounting/legal fees, office supplies, etc. When the job is completed or if you happen to recognize revenue as a % of completion the WIP & Liability are then transferred to a Cost of Sales & Sales account respectively, and the net income/loss is transferred to your income statement. I do not think job costs should be charged to expense accounts, they should be placed in the WIP asset account and job draws should be placed into a liability account.
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