• First In, First Out (FIFO) is an accounting method in which the assets bought or acquired first are thrown away first.

  • FIFO assumes that the remaining stock consists of items bought last.
  • An alternative to FIFO, LIFO is an accounting method in which assets acquired or acquired last are written off first.
  • Often in an inflationary market, the cost of goods sold using the FIFO method is attributed to lower old costs, resulting in a higher net income than using LIFO.