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TIMOTHY ROSE CONTRACTING , INC . <br /> NOTES TO FINANCIAL STATEMENTS <br /> DECEMBER 31 , 2007 <br /> NOTE 1 : SUMMARY OF SIGINFICANT ACCOUNTING POLICIES <br /> General <br /> Timothy Rose Contracting , Inc . (the " Company" ) incorporated in Florida <br /> and began business in 1991 . The Company is engaged in site clearing <br /> and paving for commercial projects for private industry and for municipal <br /> agencies in Florida . <br /> Revenue and Cost Recognition <br /> Revenues from fixed price and modified fixed price construction contracts <br /> are recognized on the percentage of completion method , measured by <br /> the percentage of cost incurred to date to estimated total cost for each <br /> contract . <br /> Contract costs include all direct materials , direct labor costs , <br /> subcontractor costs and those indirect costs related to contract <br /> performance , such as indirect labor, contract supervision and support <br /> costs , equipment cost allocations , supplies , tools , repairs and <br /> depreciation . General and administrative costs are charged to expense <br /> as incurred . Changes in job performance , job conditions , and estimated <br /> profitability may result in revisions to costs and income , which are <br /> recognized in the period in which the revisions are determined . Changes <br /> in estimated job profitability resulting from job performance , job <br /> conditions , claims , change orders , and settlements are accounted for as <br /> changes in estimates in the current period . <br /> Estimates <br /> The preparation of financial statements in conformity with generally <br /> accepted accounting principles requires management to make estimates <br /> and assumptions that affect the reported amounts of assets and liabilities <br /> and disclosures of contingent assets and liabilities at the date of the <br /> financial statements , and the reported amounts of revenues and <br /> expenses during the reporting period . Actual results could differ from <br /> those estimates . <br /> Concentration of Credit Risk <br /> Financial instruments that potentially subject the Company to credit risk <br /> consist principally of cash and contract receivables . During the year, the <br /> Company maintained cash balances that exceeded federally insured <br /> limits . <br /> 5 <br />