How to Transfer WIP to Finished Goods (Cost of Goods Manufactured)
Recording the completion of production and moving costs from Work-in-Process to Finished Goods inventory.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Finished Goods Inventory | Asset (+) | 15,000.00 | - |
| Work-in-Process (WIP) | Asset (-) | - | 15,000.00 |
💡 Accountant's Note
This represents the 'Cost of Goods Manufactured'. It moves all accumulated material, labor, and overhead into the final salable product.
Practitioner & Systems Framework
💻 ERP Architecture
For prefab or modular construction yards, this is the 'completion' transaction in the manufacturing module. The ERP rolls up the Bill of Materials (BOM) standard costs and actual job labor/overhead into a single finished good item ready for site transfer or sale.
⚠️ Audit Flags
Auditors test the cutoff of WIP transfers. Moving items to Finished Goods prematurely inflates inventory counts, while failing to transfer them delays cost of sales recognition if the item is subsequently sold. They will trace a sample of finished goods back to the production completion reports.
📄 Required Documentation
Production completion report, final quality inspection sign-off, inventory transfer log, and BOM cost rollup.
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Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.