What is FIFO (First In, First Out)?
FIFO (First In, First Out) is an inventory management and accounting method in which the earliest purchased or produced items are the first to be used or sold. This approach ensures that older stock is depleted before newer stock, which is particularly useful for managing perishable goods or products with a limited shelf life. FIFO is commonly used in both financial reporting and physical inventory management to maintain accurate stock levels and prevent the obsolescence of older inventory.