What is FIFO?
FIFO is an inventory management method standing for (First In First Out). It is a way of determining which items of inventory have been sold during a period and which items remain in stock at the end of the period. This will allow a business to determine the cost of goods sold and the value of the closing inventory. A method is needed because all items are not purchased at the same price.
The FIFO method assumes that the goods are used in the order in which they were put into inventory. The inventory purchased first (in) is sold first (out).
For further information on the first in first out method see the Wikipedia definition.
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