FIFO { First In First Out }

FIFO stands for First in First out. It is a method of keeping count of the value of the inventory held by a company or organization and stands that the inventory that was added first to the stock will also be removed from the stock first.

Benefits of FIFO

  • FIFO is the most used method worldwide.
  • Financial and income statements are harder to manipulate under the FIFO method.
  • Cost flow layers are simple.
  • More accurate match of inventory cost to current market value and gives a truer idea of inventory value and replacement costs.
  • FIFO fosters a higher gross income as the cost of goods sold is usually lower.
  • Easy to create a more intuitive flow of goods.
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