What is WIP account? When WIP account should be used? What Kind of this account ?Ahmed! In cost accounting, WIP term is used. It means work in process. All the inventory will be WIP which is not fully produced. So, WIP account will be a real account which shows the current asset. It will also show in manufacturing account as closing and opening WIP account. This account will also show in the balance sheet as current asset.
Ahmed from Egypt
This will apply only inventory work-in-process. If we are constructing a machine, plant or equipment, at that time, we will open construction work-in-process account which will be our fixed asset account. If that machine or plant or equipment is made by us, we will convert work-in-process account into that machine or plant or equipment account.
From above explanation, it is clear, WIP account is used both in manufacturing of a product or construction of a machine or plant or equipment. Its kind is already explain in its meaning.