ERPNext Inventory
What is Valuation Method?
- Valuation Method
- ERPNext supports Moving Average (FIFO-like weighted average) and FIFO valuation methods to determine the cost of stock consumed or sold.
Choosing a Valuation Method
Set the default valuation method in Stock Settings → Default Valuation Method. Choose FIFO (First In First Out) for perishable goods or serialised items where actual cost layers matter, or Moving Average for commodity items where blended cost is acceptable.
Impact on Financial Statements
FIFO maintains cost layers; each delivery consumes the earliest received batch's cost. Moving Average recalculates the weighted average cost with every receipt. Indian businesses using Ind AS may prefer FIFO for more accurate gross margin reporting.
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