ECONOMICS

Detailed explanation-1: -The oldest inventory products are sold first as per the FIFO method. The FIFO valuation method is the most commonly used inventory valuation method as most of the companies sell their products in the same order in which they purchase it.

Detailed explanation-2: -The FIFO method is the most popular inventory method because it’s the one that most closely matches the actual movement of inventory for most businesses. This method assumes that the first products you acquired will be the first that are sold.

Detailed explanation-3: -FIFO is most successful in industries where a product’s price remains steady and the company sells its oldest products first. That’s because FIFO is based on the cost of the first goods purchased, ignoring any increases or reductions in price for newer units.

Detailed explanation-4: -First In, First Out, commonly known as FIFO, is an asset-management and valuation method in which assets produced or acquired first are sold, used, or disposed of first. For tax purposes, FIFO assumes that assets with the oldest costs are included in the income statement’s cost of goods sold (COGS).

Detailed explanation-5: -FIFO is more likely to give accurate results. This is because calculating profit from stock is more straightforward, meaning your financial statements are easy to update, as well as saving both time and money. It also means that old stock does not get re-counted or left for so long it becomes unusable.