Accounting question If you are doing a balance sheet for the month of January - and you have WIP (work in progress) from a previous month which includes raw materials, labor, and overhead costs, what is this classified as? Would you consider it an Inventory asset?
WIP is a balance sheet asset account as you have not expensed out the Inventory/labor/overhead costs yet to the Income statement until it goes to sale. However since you choosed January as your example it gets trickier. I believe with certain Job Costings/Project Accounting industries FASB rules state that at the end of year you must recognize the costs at year end for the jobs/projects.
A balance sheet shows the financial position as at a particular date. It cannot, therefore, cover a period such as the month of January. If it is as at 31 January, it will include the WIP as at that date. musasira
