What does the first-in-first-out method mean?

Purchased 300 pieces of raw materials on October 6, with a unit price of 5 yuan;

Purchased 400 pieces on the 10th, with a unit price of 6 yuan;

The materials were sent out on the 26th 400 reserve.

If the first-in-first-out method is used, the cost of issuing inventory is 2,100 yuan.

300*5+100*6=2100

The "first in, first out" method for inventory, what does "first in, first out" mean?

Inventory valuation Different methods have a direct impact on taxpayers' taxable income and tax payable. The adoption of different inventory valuation methods is an important part of corporate tax planning. Enterprises can reasonably choose the valuation method to determine the actual cost of issuing inventory based on the nature of various types of inventory, business management requirements and other actual conditions, so as to achieve the purpose of saving tax costs. The following introduces three commonly used inventory valuation methods:

(1) First-in, first-out method. The first-in, first-out method is a method of valuing shipped inventory based on the assumption that the inventory purchased first should be shipped first. Using this method, the cost of inventory purchased first is transferred out before the cost of inventory purchased later, and the cost of issued inventory and ending inventory are determined accordingly.

(2) Last-in-first-out method. The last-in-first-out method is a method that assumes that inventory received later is shipped first, and the actual cost of shipped inventory is determined based on the unit cost of the most recently received inventory. Under this method, the inventory at the end of the month is usually determined based on the earlier cost, while the cost of the inventory issued is calculated based on the latest unit cost. If the quantity of inventory issued exceeds the quantity of the most recently received inventory, the excess amount will be calculated based on the last unit cost. Unit cost calculation for incoming goods.

(3) Weighted average method. The weighted average method, also known as the weighted average method for the whole month, refers to taking the total purchase quantity of this month plus the inventory quantity at the beginning of the month as the weight and removing the total purchase cost of the month plus the inventory cost at the beginning of this month to calculate the weighted unit cost of the inventory. A method based on calculating the cost of inventory issued in the current month and the cost of ending inventory.

What does the first-in-first-out method mean? Please explain it in a simpler way. It is best to illustrate with an example

First In First Out (FIFO) method means that based on the principle of first in, first out, the unit price of the shipped inventory is calculated based on the unit price of the first in stock. Method of issuing inventory costs. The specific method of using this method is: first calculate the cost of the inventory issued based on the unit price of the opening balance of the inventory. After the delivery is completed, calculate the cost based on the unit price of the first batch of inventory put into storage, and so on from front to back. The cost of issuing inventory and carrying inventory.

What does first-in-first-out mean?

Hello classmate, I am happy to answer your questions!

"First In, First Out (FIFO) first-in, first-out inventory management and valuation method, the key point is to sell the earliest purchased products first.

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1. Over 18 years old;

2. Have full capacity for civil conduct;

3. Have a high school education or above;

4 , other conditions stipulated by the China Securities Regulatory Commission.

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Gao Dun wishes you a happy life! p> What does the first-in, first-out method mean?

Hello, classmate, I am happy to answer your question!

The first-in, first-out method is based on the assumptions of inventory valuation and cost processes. According to the formula, the ending inventory is calculated based on the price of the latest purchase, and the cost of goods sold is calculated based on the price of the earliest purchase (including beginning inventory).

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What does "first in, first out" mean in logistics?

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Purpose:

In order to strictly implement the quality system management requirements, ensure that the storage conditions meet the company's quality requirements, and ensure the smooth progress of production, this provision is specially formulated

. 2.0 Scope:

Applicable to the management of all incoming and outgoing raw materials of the company. 3.0 Responsibilities:

The warehouse administrator is responsible for organizing the sorting and accounting of materials entering and leaving the warehouse. , Reasonable and neat placement, marking and first-in-first-out work.

4.0 Work content:

4.1 Warehousing management:

4.1.1 When all materials are put into the warehouse, it is necessary to check whether the material labels are consistent with the actual objects. The label inspection status must be inspection qualified. According to the inspection

The inspection results are stored in the corresponding warehouses respectively.

4.1.2 When receiving materials, the materials must be sampled and weighed and placed in designated areas. 4.2 Returning management:

4.2.1 The following rules must be followed when returning. Carry out return;

a. When storing on the upper and lower shelves, the advanced materials are placed at the bottom, and the late materials are placed on the top; b. When the shelves are stored on the same layer, the advanced materials are placed on the left, and the late materials are placed on the right; c. In the same stack When the board is stored, the advanced materials are placed at the front and the late materials are placed at the back; d. When stored in the same position, the advanced materials are placed at the bottom and the late materials are placed at the top. 4.3 Material issuance management:

4.3.1 When issuing materials, the materials and quantities indicated on the material picking list should be carefully confirmed, and materials in question should be confirmed, otherwise the materials shall not be issued.

4.4 Identification management:

4.4.1 All warehouse materials must be labeled accordingly. Monthly color labels are used to identify all materials. The fractional materials must be labeled with the fractional number and the logo surface Must face outwards and be easily identifiable.

4.4.2 All materials must be height-limited and ***. The height limit is as follows: the height measured vertically from the pallet surface is 2.0M. *** is stipulated as: in units of pallets, Each pallet has a load-bearing capacity of 1 ton, and over-height and over-weight storage is strictly prohibited.

4.4.3 Shelves or areas must be clearly marked to facilitate material retrieval. 4.5 Batch number management:

4.5.1 When multiple batch numbers appear on a single material when receiving goods, they should be distinguished according to the original production date and batch number, so that different batch numbers can be managed separately.

The corresponding batch number must be indicated in the remarks column of the Kingdee system document.

4.5.2 When registering the location card, the batch number and quantity should be marked respectively.

4.5.3 When a single material is shipped, it should be shipped with the same batch number until it is shipped. Different batch numbers can be shipped. Do not mix batch numbers for shipment. Kingdee system documents are prepared

The remarks column must be filled in Mark the corresponding batch number.

4.5.4 The same batch with different batch numbers should be managed first in first out according to the original production date.

4.5.5 When mixing ingredients, first check the batch number of the material. If there are multiple batch numbers, the ingredients should be distinguished when mixing, and the original material bags should be used when bagging.

The mixing records should also be recorded separately according to different batch numbers.

4.5.6 When adding materials, fill in the material card information according to the batch number on the packaging bag. If the batch number is changed, the material personnel will place the new batch number of materials in the baking box to bake the material in advance. After the materials in the drying barrel have been injected, the new batch number of materials will be put into the drying barrel in time, and the material card information will be updated at the same time.

4.5.7 During production, the Quality Assurance Section will fill in the batch number on the outer box label according to the batch number on the material card on the corresponding machine. If there is a change of batch number

Not Full boxes of products are packed with the last digit. When the materials are put into the warehouse, the batch number of the material should be noted in the remarks column on the Kingdee system form. The warehouse keeper must check the batch number when receiving the goods.

4.5.8 When the warehouse leaves the warehouse, the batch number of the material on the outer box label will be noted in the remarks column of the Kingdee system document. ...

What does the "first in, first out principle" mean?

The first in, first out principle means that in inventory management, items are sorted according to the time sequence when they are put into storage, and when they are shipped out of the warehouse The operation is carried out according to the principle of items entering the warehouse first and leaving the warehouse first.

This principle was first proposed in inventory management, because items have a certain shelf life. Failure to follow this principle may cause many items to expire. But the most important point during the operation is how to plan the storage of items so that managers can clearly and conveniently find items from different periods.

Therefore, when you go shopping in the supermarket, try to choose products on the shelves. In most cases, the dates of these products are the latest.

The first-in-first-out method is one of the valuation methods for inventory. It is priced based on the assumption that the goods purchased first are used or shipped first. The ending inventory amount calculated using the first-in-first-out method is relatively close to the market price.

The first-in, first-out method is a method for valuing shipped inventory based on the assumption that the inventory purchased first will be shipped first. Using this method, the cost of inventory purchased first is transferred out before the cost of inventory purchased later, and the costs of issuing inventory and ending inventory are determined accordingly.

What does first-in-first-out (FIFO) mean?

Hello classmate, I am happy to answer your questions!

The first-in, first-out method (FIFO) is a hypothetical method of inventory valuation and cost process. The ending inventory is calculated based on the price of the last purchase, and the cost of goods sold is calculated based on the price of the earliest purchase, including the beginning inventory. .

I hope my answer can help you solve the problem. If you are satisfied, please accept it as the best answer.

Thank you again for your questions. You are welcome to submit more financial accounting questions to Gaodun Enterprise.

Gordon wishes you a happy life!

What is the first-in, first-out method?

First-in, first-out means that based on the principle of first-in, first-out, the cost of issued inventory is calculated based on the unit price of the first-in inventory. Method. The specific method of using this method is: first calculate the cost of the inventory issued based on the unit price of the opening balance of the inventory. After the delivery is completed, calculate the cost based on the unit price of the first batch of inventory put into storage, and so on. , calculate the cost of issuing inventory and closing inventory. Application of the first-in, first-out method: The first-in, first-out method refers to a method of valuing the issuance and balance of inventory based on the cost flow assumption that the inventory purchased first is shipped first. The inventory of merchandise valued on the first-in, first-out method is the inventory of the last merchandise purchased. In a market economy environment, the prices of various commodities always fluctuate. Under the premise that prices rise too fast, due to the rapid rise in prices, the cost of inventory purchased first is relatively low, and the cost of inventory purchased later is relatively high. high. In this way, the value of the issued inventory is lower than the market value, the cost of product sales is low, and the cost of the ending inventory is high. However, because the selling price of the goods is calculated based on the recent market price, the income is relatively large, and the sales revenue and sales cost do not comply with the matching principle. The profit calculated based on this is on the high side, forming an inflated profit, which is actually an inventory profit. Because inflated profits will increase the corporate income tax burden and increase dividends to investors, resulting in an increase in corporate cash outflows. However, from a financing perspective, more profits, higher inventory value, and higher current ratio mean that the company is in good financial condition, which will help win the public's trust in the company, enhance investors' investment confidence, and increase profits. Size is often an important yardstick for evaluating the performance of a business leader. Many companies evaluate the performance of corporate managers based on profit levels and reward managers based on the evaluation results. At this time, managers are often willing to use the first-in-first-out method, because doing so will overestimate the profit level during their tenure, thereby gaining more immediate benefits. Note: With the first-in, first-out method, materials at the end of the period are calculated based on the closest unit cost, which is relatively close to the current market price, so the balance sheet can reflect the financial situation more truly; however, because the cost of materials issued in this period is based on the cost of the materials purchased earlier. The cost of materials is calculated, so the direct material expenses included in the cost of the product may be underestimated. When these products are sold, the reflection on the income statement will be unrealistic. Applicability: According to the requirements of the prudence principle, the first-in-first-out method is applicable to commodities whose market prices are generally on a downward trend.