Comprehensive and Detailed Explanation From SAP S/4HANA Cloud Public Edition, Management Accounting documents:

In an event-based make-to-order scenario, the system manages Work in Progress (WIP) in real-time as production steps occur36.

Goods Issue: Every time components are issued to a production order, the system automatically posts WIP to reflect the increase in the value of the unfinished product37.

Goods Receipt: In a make-to-order context, even a goods receipt (partial or final) increases the WIP balance on the production order because the finished product is often held as valuated sales order stock until delivery to the customer38.

The WIP is not "cancelled" at goods issue; rather, it is established by the costs incurred39. Formal reversal or clearing of WIP typically occurs during the final delivery or settlement phase40.