Splitting work in progress explained

Select the Divide WIP check box if you want to split the costs and revenues of the work in progress before you enter them. The costs and revenues are entered on the balance sheet accounts for the WIP. The entry types are:

2 - Project WIP cost price

8 - Project WIP revenue (optional)

For these entries you can specify whether or not you want to split the WIP.

Split WIP or not

Select the Divide WIP check box if the work in progress balance on the balance sheet account cannot be negative (this may happen, for example if you invoice in advance). To prevent this from happening, create two separate balance sheet accounts, and post a debit entry for costs to one account (these are the current assets, entry type 2) and a credit entry for the revenues to another account (these are the short-term obligations, entry type 8).

Do not select the Divide WIP check box if both the costs (debit) and the revenues (credit) are entered on one balance sheet account. In that case the balance of this account is the work in progress for that moment. In that case, entry type 8 is not used.

Split an entry

Finally, you specify if you want to split the entry of the work in progress coverage. The coverage accounts are the contra accounts on the profit and loss account for the balance entry when making entries for the costs and revenues. The entry types are:

3 - Project cost price coverage

4 - Project revenue coverage

5 - Provisional project revenue (optional)