FIFO was the traditional method used by most businesses beforeinflation became common. Under FIFO, the goods you receive firstare the goods you sell first. Under this method, you valueinventory at its most recent price. FIFO is usually used duringperiods of relatively low inflation since high inflation andincreasing replacement costs tend to skew inventory accountingfigures.
First In, First Out (FIFO)
Definition:
An accounting system used to value inventory for tax purposes. Under FIFO, inventory is valued at its most recent cost.
