Production accounting is a branch of accounting that deals with the financial aspects of film and television production. It includes tracking income and expenses, preparing budgets, and managing cash flow. Production accounting can be a complex and challenging task, but it is essential to the success of any production.
The first step in production accounting is to track all income and expenses. This information must be accurate and up-to-date in order to create an accurate budget. Income can come from many sources, such as ticket sales, merchandise sales, and sponsorships. Expenses must also be tracked carefully, as they can quickly add up. Typical expenses include salaries for cast and crew, rental fees for equipment and locations, and costs for materials.
Once all income and expenses have been tracked, a budget can be created. The budget will outline how much money is available to spend on the production. It is important to stay within the budget, as overspending can lead to financial problems.
Production accounting also involves managing cash flow. This means making sure there is enough money available to cover all expenses. Cash flow can be managed by tracking incoming and outgoing payments, and by setting up a system of credit and loans if necessary.
Production accounting is a critical part of any film or television production. Without accurate accounting, it would be very difficult to track income and expenses, create a realistic budget, or manage cash flow.