Examples of FIFO

Examples of FIFO

This is one of the measurements which is allowed under international accounting standard. FIFO stands for first in first out. It means that stock purchase first will be sold first. This treatment is very logical and keeps the stock value updated.

Example of FIFO

Particulars	Units	Rate
Opening Stock	200	50
Purchase	200	60
Purchase	200	70
Sale	100

Solution

1. Calculate Closing Stock units

Opening Stock	200
Purchase	400
Sale	(100)
Closing Stock	500

2. Valuation under FIFO

Unit	Rate	Value
100	50	5,000
200	60	12,000
200	70	14,000
Total		31,000