Many businesses use FIFO, but it’s especially important for companies that sell perishable goods or goods that are subject to declining value. This includes food production companies as well as companies like clothing retailers or technology product retailers whose inventory value depends upon trends....
In other words, the seafood company would never leave their oldest inventory sitting idle since the food could spoil and lead to losses. LIFO isn't practical for many companies that sell perishable goods and doesn't accurately reflect the logical production process of using the oldest inventory...
FIFO, which stands forFirst In, First Out, refers to the system used by businesses where the first inventory that has come in to the business (the first purchases) are the first ones that leave the business (first sales). LIFOstands forLast In, First Out, meaning that the most recent i...