FIFObeheer

FIFObeheer refers to the management of inventory using the First-In, First-Out (FIFO) method. This accounting principle dictates that the first items added to inventory are assumed to be the first ones sold. Consequently, the cost of goods sold (COGS) is calculated using the cost of the oldest inventory items, while the remaining inventory is valued at the cost of the most recently acquired items. This method is widely used for businesses that deal with perishable goods, such as food or pharmaceuticals, where maintaining product freshness and avoiding spoilage is critical. It is also common in industries where products have a limited shelf life or are subject to technological obsolescence. The FIFO method generally results in a lower cost of goods sold and a higher net income during periods of rising prices, as older, lower costs are matched against current revenues. Conversely, during periods of falling prices, FIFO typically leads to a higher COGS and lower net income. The valuation of ending inventory under FIFO reflects the most recent purchase prices, making it a closer approximation of current market value compared to other inventory costing methods. This method is often favored for its simplicity and its alignment with the actual physical flow of goods in many businesses.