Sanitation Certification Practice Test

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What does FIFO stand for in inventory management?

First In First Out
Fast Inventory Forwarding Out
First Inventory Found Out
Fixed Item Forwarding Option

The correct answer is: First In First Out

FIFO stands for First In First Out, which is a key inventory management method used to ensure that goods are sold or used in the order they were received. This approach is particularly important in the context of perishable goods, such as food items, where freshness is critical. By utilizing the FIFO method, businesses can minimize waste and ensure that older inventory is used before newer stock, helping to keep products at their best quality for consumers. This method also helps to streamline inventory turnover and can have financial benefits, as it reduces the likelihood of items becoming obsolete or unsellable. Using FIFO can contribute to better inventory control and more accurate financial reporting, as it aligns the cost of goods sold with the actual flow of inventory.