Managing Work in Progress
Project oriented organizations, such as consulting engineers and management consultants, record expenditure and income by project, campaign or event. Usually, long term projects are treated as work in progress until they are complete. Only when all the revenues and costs have been recognized and realized can the profit and loss be ascertained and transferred to the profit and loss account. You can alternatively transfer work that has been billed, with a proportion of the associated costs, to the profit and loss account periodically. You can record profit or loss to date for a project, particularly if the project out-turn is known with a degree of certainty. SunSystems can handle both of these scenarios.
Choosing an Account Type for Projects
When setting up accounts to handle your project work you can decide which account type they should be. Balance Sheet type accounts reflect work in progress as an asset. Profit and Loss type accounts recognize revenue and expenditure directly as a profit/loss-to-date figure in your ledger.
If you treat work in progress as an asset, when you transfer the project's results to the profit and loss accounts, you can use Transfer Desk to export transactions from the balance sheet project accounts. You can then reimport them with the signs reversed to offset the project entries for the completed project.