FIFO (First-In, First-Out) is a costing method where the oldest stock you purchased is the first stock used when you sell or issue items. The cost of goods sold (COGS) is taken from the earliest purchase costs, and the remaining stock is valued at the most recent purchase costs.
Step 1: Enable FIFO Cost
Go to Settings > Preference > Item.
Tick Active FIFO Cost, then click Save.
Note: Click Save after updating your settings to apply the changes.
Step 2: Set an Item to Use FIFO
- Go to Item > Item, then click Add (or select an existing item and click Edit).
- Fill in the General Information and the General Info tab (Unit Set, Cost, Sale Tax, Currency, Asset, COGS and Income accounts).
- Open the Stock Information tab.
- Costing Method – select FIFO (the default is Weighted Average).
- Tracking Method (optional) – choose None, Lot / Batch, or Serial Number.
- Click Save & Close.
Note: When FIFO is selected, the Use Average Cost in Purchase option is not available.
Example
- Purchase 10 units at $10, then 10 units at $12.
- Sell 12 units: COGS = 10 × $10 + 2 × $12 = $124.
- Remaining 8 units are valued at $12 = $96.
Check Your Items
In the Item list, the Costing Method column shows FIFO or Weighted Average for each item. Use Report > Stock Valuation to review your stock value.
Tips
- Decide the costing method before recording transactions for the item.
- Use Lot / Batch tracking together with FIFO for items that have batch numbers or expiry dates.