FIFO is an abbreviation that stands for “First in, First out.” It is a way of keeping count of the value of the inventory that is maintained by a company or organization, and it is based on the principle that the inventory that was added to the stock first will likewise be removed from the stock first.
The advantages of using FIFO
FIFO is the method that is utilized the most all around the world.
Within the framework of the FIFO approach, it is more difficult to alter financial and income statements.
Layers of cost flow are straightforward.
The cost of the inventory is more accurately matched to its current market value, which provides a more realistic picture of the worth of the inventory and the expenses of replacing it.
Due to the fact that the cost of items sold is typically lower, FIFO helps to nurture a greater gross income.
It is simple to establish a flow of things that is more intuitive.
