FIFO means first in first out. This method assumes that the oldest products in a company’s inventory have been sold first. The costs paid for those oldest products are the ones used in the calculation.
FIFO Â

issue price method	Date	Receipt	Â	Â	Issue	Â	Balance	Â	Â
Â	Qty	price	Value	Qty	price	Value	Qty	value
1/1	1000	10	10000	-	-	-	1000	10000
2/1	2000	12	24000	-	-	-	3000	34000
3/1	-	-	-	1500	-	1500	1500	18000
4/1	1000	11	11000	-	-	2500	2500	27,500
5/1	-	-	-	1000	Â	1500	1500	16500

From the table above, value of closing stock using FIFOÂ =Â
Total closing stock = 1500
previous stock bought at N12 = 500 units
Last stock bought at N11 = 1000 units
12 x 500 + (11 x 1000) = 17,000