Work in Progress

This Current Assets code records work in progress. As an asset account, it normally carries a debit balance: debit entries increase the balance and credit entries decrease it.

Real-world examples

Manufacturing

On a production line, WIP is physically part-built product sitting between raw materials and finished goods at the point a stock count or management accounts are prepared — components that have been machined but not yet assembled, say. It's valued at the cost incurred so far: materials issued plus a share of labour and overhead absorbed to that stage, moving into 1003 (Finished Goods) once complete.

Construction

On a building contract, WIP represents the cost of work carried out on site but not yet certified or invoiced to the client — measured very differently from a factory's part-built units. It typically includes materials used, labour and a share of subcontractor costs, assessed against the value of work certified by a quantity surveyor rather than a physical stock count.

Creative and professional services

An agency working on a fixed-price project spanning a period end might carry a small WIP balance for design or development time incurred but not yet invoiced — unbilled work in hand. Many service businesses avoid this altogether by invoicing on account or at milestones so nothing needs holding on the balance sheet, which is why WIP shows up far less consistently here than in manufacturing or construction.

Commonly confused with

Because code 1001 (Stock) sits right next to this one in Current Assets, it's a common mis-posting target. Code 1002 is specifically for work in progress, while 1001 covers stock — similar in nature, but keeping them separate is what makes the current assets section of your management accounts meaningful rather than a single lumped total.

What a mis-posting here costs you

Because Work in Progress sits within Current Assets, an error here overstates or understates working capital on the balance sheet rather than affecting reported profit — it won't move the bottom line, but it can make the business look more, or less, liquid than it actually is.

Other codes in Current Assets