The FIFO Method in Practice

The FIFO (First-In, First-Out) method means that the oldest inventory items are sold or used first. Imagine a grocery store: products like milk are stocked, and the earliest received milk is sold before newer stock. This ensures items are used or sold while still fresh, reducing waste from spoilage. FIFO helps businesses keep inventory fresh, manage costs accurately, and comply with accounting standards. It’s commonly used in retail, manufacturing, and food industries to maintain efficiency and reduce losses.