First In, First Out - FIFO

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DEFINITION of 'First In, First Out - FIFO'

An asset-management and valuation method in which the assets produced or acquired first are sold, used or disposed of first. FIFO may be used by a individual or a corporation.

INVESTOPEDIA EXPLAINS 'First In, First Out - FIFO'

For taxation purposes, FIFO assumes that the assets that are remaining in inventory are matched to the assets that are most recently purchased or produced. Because of this assumption, there are a number of tax minimization strategies associated with using the FIFO asset-management and valuation method.

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RELATED FAQS
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    The first-in, first-out (FIFO) accounting method has two key disadvantages. It tends to overstate gross margin, particularly ... Read Full Answer >>
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