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November 2022

Depending on the actual shelf life, this may not reflect the real value of the company's inventory. For example, the seafood company—from the earlier example—would use their oldest inventory first (or first in) when selling and shipping their products. Because the seafood company would never leave older inventory in stock (because it could spoil), FIFO accurately reflects the company's process of using the oldest inventory first in selling their goods. The amount a company pays for raw materials, labor, and