Question

Explain the accounting method of first-in first-out, please!

Answer 1

FIFO... that's akin to a queue.

Answer 2

That means the first assets to be bought are the first sold.

Answer 3

For example, imagine if you:
* buy 50 shares of stock,
* a year later buy another 50 shares,
* a month after that sell 25 shares

FIFO means that when you sell the 25 shares, it's 25 out of the 50 you bought first, not the 50 you bought a month ago. That's important because assets held for short times are taxed differently than assets held for longer times. ("Short term" vs "long term" capital gains)

Answer 4

Thanks.