what does work in progress stock consist of
Work in process - wikipedia Work in process `` Work in progress '' redirects here . For other uses , see Work in progress ( disambiguation ) . This article needs additional citations for verification . Please help improve this article by adding citations to reliable sources . Unsourced material may be challenged and removed . ( January 2013 ) ( Learn how and when to remove this template message ) Work in process ( WIP ) , work in progress ( WIP ) , goods in process , or in - process inventory are a company 's partially finished goods waiting for completion and eventual sale or the value of these items . These items are either just being fabricated or waiting for further processing in a queue or a buffer storage . The term is used in production and supply chain management . Optimal production management aims to minimize work in process . Work in process requires storage space , represents bound capital not available for investment and carries an inherent risk of earlier expiration of shelf life of the products . A queue leading to a production step shows that the step is well buffered for shortage in supplies from preceding steps , but may also indicate insufficient capacity to process the output from these preceding steps . WIP in construction projects ( edit ) Work - In - Process in construction accounting identifies the value of construction projects which are currently being worked on by the construction firm . To properly account for each project , four values are needed for each project at the end of any given month ( or period ) : the Sales Price ( excluding sales tax ) for the project , the total Cost Estimate for the project , the Costs - To - Date , the Billed - To - Date . By taking the Costs - To - Date divided by the Cost Estimate , the `` percentage complete '' for the project is calculated . For example : Assume a project is estimated to cost $70,000 by the time the work is complete Assume at the end of December , $35,000 has been spent to date for the project $35,000 divided by $70,000 is 50 % , therefore , the project can be considered 50 % complete at December 31 . Calculation of the Percentage complete is a valuable tool in determining how much the client should be billed - it is important that Billings , and even collection of these billings , are greater than the costs expended to do the work . This ensures that the client is directly funding the construction work , and that the contracting firm minimizes borrowing on behalf of the client . Using the example above , suppose the following : the Sales Price of the project is $100,000 $100,000 times 50 % ( the level of completion ) = $50,000 Therefore , for the period ending December 31 , the client should be invoiced at least $50,000 to properly fund the work . Tax treatment ( edit ) In the United Kingdom , HMRC has no specific definition of `` work in process '' but three different types of uncompleted items are identified for tax purposes : manufactured products , contracts for services , and construction contracts . References ( edit ) ^ Jump up to : `` Work - in - process dictionary definition work - in - process defined '' . business.yourdictionary.com . Retrieved 2014 - 07 - 12 . Jump up ^ `` WORK IN PROCESS DEFINITION '' . ventureline.com . Retrieved 2014 - 07 - 12 . Jump up ^ `` What is work in process ? definition and meaning '' . businessdictionary.com . Retrieved 2014 - 07 - 12 . Jump up ^ `` Work in Process financial definition of Work in Process '' . financial-dictionary.thefreedictionary.com . Retrieved 2014 - 07 - 12 . Jump up ^ `` Collins English Dictionary Always Free Online '' . collinsdictionary.com . Retrieved 2014 - 07 - 12 . Jump up ^ `` Work In Progress ( WIP ) Definition Investopedia '' . investopedia.com . Retrieved 2014 - 07 - 12 . Jump up ^ `` WORK IN PROGRESS DEFINITION '' . ventureline.com . Retrieved 2014 - 07 - 12 . Jump up ^ `` W - Wage to WTO ( World Trade Organisation ) - Dictionary '' . tuition.com.hk . Retrieved 2014 - 07 - 12 . Jump up ^ HMRC , ( https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim33020 Business Income Manual , section 33020 - Stock : meaning of : work in progress ) , accessed 24 January 2018 Retrieved from `` https://en.wikipedia.org/w/index.php?title=Work_in_process&oldid=842412734 '' Categories : Inventory Hidden categories : Articles needing additional references from January 2013 All articles needing additional references Talk About Wikipedia Deutsch Euskara Français Italiano 日本 語 Polski Português Türkçe 中文 Edit links This page was last edited on 22 May 2018 , at 08 : 31 ( UTC ) . About Wikipedia
1. Work in process (WIP)
2. Partially finished goods
3. Production and supply chain management
4. Construction accounting
5. Percentage complete calculation