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  • Work in progress


 

 

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AccountRight Plus and Premier only

Work in progress is work that you have done for your clients but haven’t billed yet. Work in progress is indicated on activity slips by a value other than zero in the Left to Bill field.

Your accounting records will only reflect a sales transaction when you bill the activities. However, some accountants consider that, from an accounting perspective, your clients owe you for your work in progress even if you haven’t yet billed your clients for it.

If your work in progress routinely represents a significant amount of money, you should consider adjusting your accounting records to reflect this.

Here's one way you can achieve this by displaying your work in progress on your business reports. But you should consult your accountant for more advice.

 

To display work in progress on reports

To display work in progress on reports

  1. Create two new accounts (Accounts command centre > Accounts List).
    1. Click the Income tab then click New.
    2. Create an income account called Work in Progress - Income. Here's our example:
      Example income account setup
    3. Click OK.
    4. Click the Asset tab then click New.
    5. Create an asset account account called Work in Progress - Accrual. Here's our example:
      Example asset account setup 
    6. Click OK.
  2. At the end of the month, run the Activity Slip (Activity Detail) report (Reports menu > Index to Reports > Time Billing > Activity Slip Detail).
    • In the Dated From field, select a date that will include all open activities.
    • In the To field select the last day of the current month.
    • The total Balance on the report represents the unbilled WIP amount for that month.
  3. Create a journal entry to credit the income account and debit the asset account for the unbilled WIP amount determined in the previous step. Your WIP will now display on reports.
    Here's our example journal:
    Example end of month journal entry
  4. At the beginning of the next month, create a reversing journal entry to clear the prior month's WIP value (debit the income account and credit the asset account).
    Here's our example journal:
    Example start of month journal entry

 

Save the two general journal entries as recurring transactions which you can use each month, and just change the amounts.