What is work in progress inventory?
At any industrial enterprise, there is a product that has not passed a cycle of manufacturing ultimately and has not become ready. Therefore it is in a stage of faulty manufacture. However, such goods are the property of the enterprise, and therefore must necessarily be inventoried, as well as any other tangible assets. An inventory of a refinery takes account of defective goods and helps to determine the cost of the finished product or service.
The production process is continuous so that any enterprise will have unfinished products, unfinished works on a par with the finished products. To begin with, it is essential to understand that crude production is considered to be products that have not passed the full production cycle, as well as works and services not accepted by customers. For example, in food production, it may be blanks for cooking, in construction — unfinished objects or repair work.
However, such products are still the property of the manufacturing company, so they are subject to mandatory inventory along with other material values. Work in process inventory generally described as designed method to account for non-finished products, their volume, actual cost, and reliability of data on these products in accounting reports.
The most crucial purpose of the inventory of unfinished production is to determine the volume of WIP objects, to identify unrecorded defective products, to form the completeness of production products, to determine the balances of suspended or canceled orders, as well as to calculate the cost of products that are at the stage of unfinished production.
Also, the purpose of the inventory is to merge actual data with accounting indicators and to determine the factors affecting the mismatch of information.
Before taking an inventory of work in progress, several preparatory procedures must be carried out for the process to produce effective results. For example, storekeepers need to sort items of work in advance according to their vocabulary, as well as to separate defective items to make it easier for direct calculation.
At the same time, such inventory should be carried out regularly; as a rule, it occurs every month. Accounting staff should carry out all available documents on the movement of materials and objects of work in progress in the accounts of synthetic and analytical accounting. Also, a chart should be prepared to calculate costs, and orders that have been canceled or suspended for any reason should be identified.
"What is work in progress inventory?" Custom-Writing, 3 Apr. 2020, custom-writing.org/qna/what-is-work-in-progress-inventory/.
1. Custom-Writing.org. "What is work in progress inventory?" April 3, 2020. https://custom-writing.org/qna/what-is-work-in-progress-inventory/.
Custom-Writing.org. "What is work in progress inventory?" April 3, 2020. https://custom-writing.org/qna/what-is-work-in-progress-inventory/.
Custom-Writing.org. 2020. "What is work in progress inventory?" April 3, 2020. https://custom-writing.org/qna/what-is-work-in-progress-inventory/.
Custom-Writing.org. (2020, April 3). What is work in progress inventory? Retrieved from https://custom-writing.org/qna/what-is-work-in-progress-inventory/
Custom-Writing.org. (2020) 'What is work in progress inventory'. 3 April.