Work in process

Examples of Work in process in the following topics:

• Categories of Goods Included in Inventory

  • Most manufacturing organizations usually divide their "goods for sale" inventory into raw materials, work in process, and finished goods.
  • The firm's work in process includes those materials from the time of release to the work floor until they become complete and ready for sale to wholesale or retail customers.
  • Work in process or work in progress (WIP) - Materials and components that have began their transformation to finished goods.
  • Optimal production management aims to minimize work in process.
  • Distinguish between the raw materials, work in process, finished goods and goods for resale

• Nature of Inventory

  • The firm's work in process includes those materials from the time of release to the work floor until they become complete and ready for sale to wholesale or retail customers.
  • These holdings are recorded in an accounting system .
  • Time - The time lags present in the supply chain, from supplier to user at every stage, requires that you maintain certain amounts of inventory to use in this lead time.
  • However, in practice, inventory is to be maintained for consumption during 'variations in lead time'.
  • Work in process, WIP - materials and components that have began their transformation to finished goods.

• Flow of Inventory Costs

  • The firm's work in process includes those materials from the time of release to the work floor until they become complete and ready for sale to wholesale or retail customers.
  • LIFO is only used in Japan and the United States.
  • The direct method of preparing a cash flow statement results in report that is easier to understand.
  • An increase in an asset account is subtracted from net income.
  • An increase in a liability account is added back to net income.

• Costing Methods Overview

  • There are four accepted methods of costing items: specific identification; first-in, first-out; last-in, first-out; and weighted-average.
  • Cost accounting is regarded as the process of collecting, analyzing, summarizing, and evaluating various alternative courses of action involving costs and advising the management on the most appropriate course of action based on the cost efficiency and capability of the management.
  • Note that a manufacturing business's inventory will consist of work in process, or unfinished goods, and finished inventory; the costs of unfinished and finished inventory contain a combination of costs related to raw materials, labor, and overhead.
  • In some companies, the first units in (bought) must be the first units out (sold) to avoid large losses from spoilage.
  • In these cases, an assumed first-in, first-out flow corresponds with the actual physical flow of goods.

• Reporting R&D Cost

  • Development is the application of research findings to a plan or design for the production of new or substantially improved materials, devices, products, processes, systems, or services, before the start of commercial production or use.
  • A cost which cannot be deducted in the year in which it is paid or incurred must be capitalized.
  • In this case, the contract usually specifies that all direct costs, certain specific indirect costs, plus a profit element, should be reimbursed to the enterprise performing the R&D work.
  • It is the company for whom the work has been performed that reports these costs as R&D and expenses them as incurred.
  • It should be emphasized that R&D activities do not include routine or periodic alternatives to existing products, production lines, manufacturing processes, and other ongoing operations even though these alterations may represent improvements.

• Inputs to Accounting

  • This confusion is understandable because the accounting process includes the bookkeeping function, but is just one part of the accounting process.
  • However, while these systems may be seen as "real" bookkeeping, any process that involves the recording of financial transactions is a bookkeeping process.
  • In modern accounting softwares or ERP, the general ledger works as a central repository for accounting data transferred from all sub-ledgers or modules like accounts payable, accounts receivable, cash management, fixed assets, purchasing, and projects.
  • Each account in the general ledger consists of one or more pages.
  • Posting is the process of recording amounts as credits, (right side), and amounts as debits, (left side), in the pages of the general ledger.

• Analyzing Intangible Assets

  • If impaired, goodwill is reduced and loss is recognized in the Income statement.
  • Research and development (R&D) costs are not in and of themselves intangible assets.
  • R&D activities frequently result in the development of something that is patented or copyrighted (such as a new product, process, idea, formula, composition, or literary work).
  • Many businesses spend considerable sums of money on research and development to create new products or processes, improve present products, and discover new knowledge that may be valuable.

• Working Capital Management Analysis

  • It is a derivation of working capital commonly used in valuation techniques such as discounted cash flows (DCFs).
  • Decisions relating to working capital and short term financing are referred to as working capital management.
  • Working capital management entails short-term decisions, usually relating to the next one-year period and are based in part on cash flows and/or profitability.
  • Because this number effectively corresponds to the time that the firm's cash is tied up in operations and unavailable for other activities, management generally aims for a low net count.
  • When ROC exceeds the cost of capital, firm value is enhanced and profits are expected in the short term.

• Defining Accounting

  • Accountancy is the process of communicating financial information about a business entity to users such as shareholders and managers.
  • Accountancy is the process of communicating financial information about a business entity to users such as stakeholders and managers.
  • In "Summa Arithmetica," Pacioli introduced symbols for plus and minus for the first time in a printed book, symbols that became standard notation in Italian Renaissance mathematics.
  • Although Luca Pacioli did not invent double-entry bookkeeping, his 27-page treatise on bookkeeping contained the first known published work on that topic, and is said to have laid the foundation for double-entry bookkeeping as it is practiced today.
  • Even though Pacioli's treatise exhibits almost no originality, it is generally considered as an important work, mainly because it enjoyed a wide circulation, was written in the vernacular Italian language, and was a printed book.

• Copyrights

  • A person who creates a work of authorship has a copyright the moment the work is created and is fixed in a form that either a person or machine can read.
  • As a result, an author does not have to register their work with the U.S.
  • Formally registering a work is generally recommend because it provides additional legal protection against those who would copy the work.
  • If the business developed the work in question, the value of the copyright is equal to the cost the business incurred securing the copyright.
  • The business will record an amortization expense to reflect the decrease in the asset's value.