First in, first out (FIFO)

Definition in practice

Physical stock rotation and accounting valuation are related controls, but one does not prove the other happened. A spreadsheet can calculate FIFO while a poorly arranged shelf causes newer stock to be taken first. Delivery labels, accessible storage and a clear receiving routine make the physical movement visible.

Formula and worked example

Closing value = remaining quantity from each retained purchase layer × that layer’s unit cost.

Suppose an example store receives 10 units at $2 each and later 10 units at $3. After using 12 units under FIFO, 8 units from the newer receipt remain, valued at $24. Using the last purchase price for every stock item is a different valuation shortcut, even when it happens to give the same result here.

Use it in the kitchen

Check the condition and applicable use-by instructions of actual goods; an accounting convention is not a food-safety decision. For costing reports, document the chosen valuation method and use it consistently. If the method changes, explain the effect on opening and closing values rather than treating the resulting usage difference as operational waste.

Keep the input record

Write the unit, period and preparation beside the figure you use. Keep the original receipt, count or recipe record available so another person can reproduce the calculation. A clearly labeled assumption is useful for planning; it should not later be mistaken for a measured result.

Use the linked calculator to test your own inputs, then check the result against the original record. The browser ledger can hold recipe quantities and purchase prices, while your stock and accounting records provide the wider operating context. Export a backup before replacing a working ledger.