Work-in-progress (acronym: WIP) is a commonly used word in the accounting and costing parlance. In layman's terms, it indicates a work that has commenced but has not been completed yet i.e. it is still in progress. The work could be anything like construction of a bridge, preparation of a dish or composition of music or writing a book. When this is applied in the manufacturing or production scenario it indicates that part of stock or inventory that is no longer raw materials, because it has been worked on or undergone some processing, but also not finished goods yet because it has not been completed yet. It indicates that the work is in one of the various stages of production between raw materials and finished goods. The stock of raw materials that has been processed but not been completed yet and therefore not saleable is referred to as Work-In-Progress. This being part of the inventory item is reported on the asset side of the balance sheet under the head 'Inventories'.

It refers to that part of processed raw materials in which some amount has been invested for processing and more needs to be invested for further processing to bring it to a stage where it can be sold. The value of work-in-progress reported in the balance sheet is the cost of raw materials and the cost of processing incurred till date. In line with the conservatism principle, if the net realizable value of the product is lower than the costs already incurred (cost of raw materials plus processing), the work-in-progress is valued at that lower cost. In effect, the valuation principle followed is the cost or net realizable value, whichever is lower. The costing method employed by a company to allocate different costs between expenses and cost of goods sold impacts the valuation of work-in-progress.

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