FIFO Method, or “First-In, First-Out,” is an inventory valuation approach where the oldest inventory items are recorded as sold first. This method aligns with the natural flow of inventory, ensuring that the cost of goods sold reflects the earliest acquired costs. The FIFO sign is often used in accounting systems to denote this method. It is particularly useful in periods of rising prices, as it results in lower cost of goods sold and higher net income.
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