Also called first in, first out
FIFO stands for first in, first out. Stock that arrived earlier is sold before stock that arrived later. On the shelf it means moving older stock to the front. In the books it means the cost of each sale is taken from the oldest purchase first.
On the shelf, FIFO keeps stock fresh and stops old packaging from piling up at the back. In accounting, it makes your profit match what you actually paid, which matters when purchase prices keep changing. It also values your closing stock at the most recent prices you paid, which is closer to what it would cost to replace.
A shop buys 100 packs of biscuits at ₹20 and later 100 more at ₹22. It sells 120 packs. Under FIFO, the cost is 100 × ₹20 plus 20 × ₹22, which is ₹2,440. The 80 packs left are valued at ₹22 each. Okount uses FIFO by default when selling from batches.