Calculate Ending Inventory Using FIFO is a financial accounting method used to value inventory. It stands for “first-in, first-out” and works by treating the items which are placed into inventory first as the ones that are sold off first. This method is useful in determining the cost of goods sold and help to accurately reflect the flow of inventory in a company’s balance sheets. By using FIFO, accountants can make sure that companies are accurately reflecting their current stock value and up-to-date inventory costs.