Accounting glossary
What is FIFO (first in, first out)?
An inventory flow assumption: the oldest stock is treated as sold first. FIFO usually mirrors physical reality in retail — you rotate stock forward — and in rising-cost times it reports higher inventory value and higher margin than average-cost methods.
Example
You buy 100 units at $10, then 100 more at $12. Sell 120 and FIFO costs them as 100 at $10 plus 20 at $12 — $1,240 of COGS — leaving 80 units valued at $12.
FIFO usually mirrors how physical stock actually rotates, which is why it is the common choice for dated or perishable goods.
In SeroBooks
Batch tracking makes rotation enforceable, not just assumed. Batch & expiry tracking →
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