FIFO Perpetual

FIFO Perpetual is one of the stock valuation methods used for calculating closing balance of inventory in Tally.ERP 9. The inventory reports use valuation methods in case of intra-year reporting.

In this intra-year reporting, when books are closed at the end of a financial year, closing balance is carried forward to next financial year. Thus inventory reports use the values from closing balance for reporting in the new financial year.

FIFO Perpetual valuation method helps in carrying forward balances based on actual purchase costs and it displays the cost/consumption values in inventory reports of the new financial year accordingly.

For example,

Scenario 1: Valuation method - FIFO

The closing balance for the stock item at the time of closing of books:

Item: 00001

Quantity: 200

Value: 22000

When stock item 00001 is used in the new financial year, the inventory reports will display the cost /consumption value of these items at the rate - 100 (Rate= 22000 (Value)/200 (Quantity).

Scenario 2: Valuation Method – FIFO Perpetual

The closing balance for the stock item at the time of closing of books:

Item: 00002

Quantity: 200

Value: 22000

When stock item 00002 is used in the next financial year, the inventory reports will display the cost/consumption value at the rate – 100 for the first batch of stock and 120 for the second batch i.e. based on the actual purchase price.