Explain briefly on the topic of “First in First out (FIFO) method”.
Explain briefly on the topic of “First in First out (FIFO) method”.
Aanandini Mar. 09, 2018
First in First out (FIFO) Method: It is a cost formula used in assigning the cost to inventories
which are ordinarily interchangeable. The FIFO formula is based on the assumption that the
items of inventory which were purchased or produced first are consumed or sold first, and
consequently the items remaining in inventory at the end of the period are those which have
been most recently purchased or produced. It is not applied where items of inventory are not
ordinarily interchangeable
