Answers4uFirst in initially out (fifo) approach of inventory valuation reflects expense circulation about similar to the physical flow of products. businesses dealing in perishable items favor fifo strategy because it keeps a inspect on manipulation of revenue. renders it much easier to acquire profit or loss at the finish of year bereason inventory worth in balance sheet matches the present sector price of the closing stock.


The ‘inventory method’ where the ‘price flows tend’ to follow the physical flow is FIFO.


The complete form of FIFO is First in initially out. In FIFO the strategy of inventory complies with the process where the cost flow adheres to the physical flow of the products. This is a simple technique for business organizations because businesses dealing in perishable goods favor the FIFO strategy because the ‘costs of the goods’ purchased are the prices that are charged to ‘price of goods’ marketed once the company sells the items. This procedure helps in evaluating the ‘profit or loss’ at the finish of the year because inventory worth in the balance sheet matches the existing sector price of the cshedding stock.

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