FIFO stands for first in, first out. As a cost method it assumes the oldest units you bought are the first ones you sold, so each sale takes its cost from your oldest remaining purchase price and the stock still on the shelf carries your most recent prices. When prices are rising, that makes cost of goods sold lower than a blended average would, and the value of the remaining stock higher.
Ardent Seller does not use FIFO to cost stock. It uses weighted average cost everywhere, so each item has one blended cost per location and no stack of purchase prices to work through. Tax rules on inventory methods vary, so check with a tax preparer about which method fits your business.
The same words have a separate, practical meaning: rotating stock so the oldest units ship first. That still matters for anything with a shelf life, and it is independent of the cost method. You can sell your oldest stock first while your costs are averaged, and a batch or lot number tells you which units came in together.
Related terms
Weighted Average Cost
A costing method that blends every purchase of an item into one average unit cost: total cost divided by total quantity. Ardent Seller uses it for all stock.
COGS (Cost of Goods Sold)
The total cost of materials, labor, and overhead directly tied to producing the goods you sell. Tracked automatically through purchases, recipes, and production runs.
Inventory Valuation
The total monetary value of all inventory currently in stock, calculated based on purchase costs. A key report for understanding the assets held in your business.
Specific Identification
An inventory accounting method that tracks the actual cost of each individual item, rather than averaging or formula-based costs — ideal for one-of-a-kind goods.
Batch/Lot Number
A unique identifier assigned to a production run or group of items produced together. Enables traceability from raw ingredients to finished products for quality control and compliance.