It is a very useful accounting method when calculating the value of an inventory. This inventory, by its nature, can be of the company’s products, the raw materials with which it works or also necessary components for its usual production.
The FIFO inventory can be seen as a theoretical model of the actual flow of products, used in the context of accounting or finance, it can also be considered as a supply chain practice, designed to limit the problems of expiration or obsolescence, which have a negative impact on stored products.
When we talk about the different methods to properly manage a warehouse, we can not think of irremovable or standard formulas that will be viable for any situation. However, there are some procedures such as the FIFO method that are often used because it can help solve a large part of the needs when making an assessment or an inventory of what is contained in our warehouse.
Another positive feature of using this type of system is that it is especially convenient, in terms of accounting, when the price of the goods that are stored has a tendency to stay or go down.
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