A value for work in progress and stock is included in the balance sheet of your accounts. The entry to introduce it is Dr Stock in the balance sheet (an asset) and Cr Closing stock in the Profit and loss account (increasing profit reported for the accounting period).

Accounting standards in UK require that stock must be stated at the lower of cost and net realisable value. Therefore stock that will sell for a profit is stated at cost, for example the invoiced cost of a product held for sale. However, if you have to sell stock at a loss, it is stated at the net selling value after deducting all the costs that need to be incurred to sell the stock. As accounts are prepared after the accounting period has ended, the price of stock sold that was held at the year end can be used to estimate if unsold stock will sell at a loss or a profit.

The primary statement of profit and loss shows turnover (income) less cost of sales to work out the gross profit. Cost of sales should be the direct costs incurred to produce the turnover and gross profit. It includes cost of purchasing raw materials or products, plus the opening value of stock held at the beginning of the accounting period, less the closing value of stock held at the end of the accounting period.  In this way, the sales and directly related costs are matched to show the true profit made in the period. Therefore the items that are included in turnover and cost of sales will vary from company to company.

Your balance sheet will balance because you have adjusted stock and accumulated profit in the balance sheet by the same amount.