what is the fifo method

what is the fifo method is a common accounting and inventory management technique. FIFO stands for “First In, First Out,” and it assumes that the first items purchased or produced are the first to be sold or used. This method is particularly important for businesses dealing with perishable goods or those that want to ensure older inventory is cleared before new stock. FIFO helps companies manage their costs and profits by accounting for inventory in a way that reflects the actual flow of goods.