Is there a difference between Work in Process and Work in Progress?

It depends on the user of the terms. I use the term “work in process” to mean a manufacturer’s inventory that is not yet completed. I think of work in process as the goods that are on the factory floor of a manufacturer. The amount of Work in Process Inventory would be reported along with Raw Materials Inventory and Finished Goods Inventory on the manufacturer’s balance sheet as a current asset.

I use the term “Work in Progress” to mean construction of long term assets (that will be used in the company’s business) that are not yet completed. For example, if a company is constructing an addition to its building and the work is only partially completed, the amount spent so far would be recorded as Work in Progress, Construction in Progress, or Construction Work in Progress (CWIP) and the account would be on the balance sheet as a long-term asset in the section entitled Property, Plant and Equipment. When the project is completed and put into service, the amount would be transferred out of CWIP and would be reported in the account Buildings within Property, Plant and Equipment. At that point, the depreciation of the addition will begin. (If a company is constructing an assembly line or a huge machine that will take time to build, the amounts would also be accumulated in CWIP. When the project is completed and is placed into service, the amount will be transferred from CWIP to Equipment and depreciation will begin.)

To make matters even more complicated, companies producing items under a long-term contract would use an account entitled Construction in Process.

Your question points out the need for caution and complete understanding of what the communicator intends. Remember that the sender of a message might not realize that there are important differences between slightly different terms.

About the Author: Harold Averkamp (CPA) has worked as an accountant, consultant, and university accounting instructor for more than 25 years.

He is the author of the 2010 Master Accounting Download Package which has been praised for it's ability to simplify accounting in a way that anybody can understand.