Glossary · Also called WIP
Work in progress
Partly-finished goods not yet ready for sale.
What it means
Inventory that is partway through the production process at the period end, neither raw material nor finished goods.
Example
Half-assembled furniture at the year end is work in progress.
Why it matters
Opening and closing work in progress adjust the cost of production in a manufacturing account.
In practice
Work in progress appears twice in the manufacturing account. Opening work in progress is added within the cost of production calculation and closing work in progress is subtracted. This way only goods completed during the period are transferred to finished goods. The closing figure is also listed as a current asset in the statement of financial position, usually between raw materials and finished goods.
Imagine a furniture maker with half-assembled chairs at year end valued at RM2,500. That RM2,500 is carried forward as an asset and brought back as opening work in progress next period.
Students often confuse it with finished goods. Work in progress is still on the factory floor and cannot yet be sold. Finished goods are complete and ready for the warehouse or customer. Valuing work in progress usually includes the direct costs incurred so far plus a share of factory overhead.
If opening and closing work in progress is hard to place in the layout, one of our teachers can practise the manufacturing account with you. Book a trial class.
Related terms
Syllabus reference: Cambridge 0452 and 0985, syllabus for 2027 to 2029, sub-topic 5.4 Manufacturing accounts (page 17).
Definitions here are general accounting explanations for study. For your board's exact wording, see its official syllabus via Sources.
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