FIF Inventory Accounting Method | Definition | What is it?

FIFO Inventory Accounting

FIFO Inventory Accounting Method

First-in, First-out. A method of inventory valuation based on the assumption that the first goods purchased are the first goods used or sold, regardless of actual physical flow. Under this method, the earliest goods purchased are the first ones removed from the inventory account on the balance sheet. As a result, the remaining/ending inventory balance is composed of items purchased at the most recent costs for the items.

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