Perpetual Inventory Valuation & FIFO Cost Layers
NespoCASH operates a continuous perpetual inventory engine. Every inbound purchase forms a distinct FIFO cost layer.
[IMAGE - FIFO cost layer breakdown view showing chronological purchase batches and remaining quantities]
How FIFO Layers Work
When items are sold, the valuation engine consumes units from the oldest active purchase layer first, calculating exact Cost of Goods Sold (COGS).
Accounting & Ledger Impact
| Account Name | Code | Classification | Debit | Credit |
|---|---|---|---|---|
| Cost of Goods Sold (COGS) | 5010 | Direct Expense | Layer Cost Amount | - |
| Merchandise Inventory | 1200 | Current Asset | - | Layer Cost Amount |
Note: Perpetual FIFO valuation eliminates the need for periodic manual physical inventory counts to calculate gross profit.