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Introductory Technical Fundamental Economics Opinion Sectors International Regulatory Other Markets

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Definition

This is a method of valuing stock which assumes that the oldest stock in the warehouse is used before the more recently purchased stock. Since the price of stock purchased will usually go up because of inflation through the year, the method chosen to value stock can have a significant impact on the company's cost of sales and hence on its profit. You should carefully examine the note on financial policies in the financial statements to see whether the method of valuing stock has changed during the financial year.

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