FIFO

• Overall


  This is a method of pricing inventory that assumes that the first goods purchased are also the first goods sold and therefore the cost of each unit sold is the first cost recorded

  Stock costs may be understated and profits overstated. Moreover, stock may be overvalued at the end of the financial period

  An example of this in a supermarket where the new milk is placed behind the older milk on the shelf so that the milk with the shorter expiry date sells first

  Like milk at the supermarket