Home > Accounting Glossary > Work in Progress
Work in Progress: Definition and Meaning
Definition
Work in progress, often called WIP, is the cost of goods or projects that are not yet complete. In construction, WIP commonly refers to a schedule used to track the financial status of active contracts.
Why It Matters
A current construction WIP schedule can help management evaluate project costs, billings, estimates, profitability, underbillings, overbillings, and cash-flow implications. It may include contract value, approved and pending changes, costs incurred, estimated costs to complete, estimated gross profit, revenue recognized, and billings to date.
The usefulness of WIP reporting depends on timely and accurate job-cost data, current project estimates, sound billing information, and communication among operations, project management, estimating, and accounting.
Example
A contractor reviews each active project’s contract amount, costs incurred, billings, estimated cost to complete, and expected gross profit in a monthly WIP schedule.
Related Terms
TYS provides accounting, tax, construction-accounting, and business-advisory support to closely held businesses, contractors, individuals, and families. With offices in Fairport, New York, and Walnut Creek, California, TYS helps clients better understand their financial information and prepare for important decisions.
Have a question about Work in Progress or your business’s financial reporting?
Contact TYSThe information on this page is provided for general educational purposes only and is not accounting, tax, legal, financial, insurance, bonding, or business advice. Consult qualified professionals regarding your particular circumstances.
Back to the Accounting Glossary →