What is 'error-tolerant FIFO valuation' in SAP MM-IV - Invoice Verification?

error-tolerant FIFO valuation - Overview

• Component: MM-IV

• Component Name: Invoice Verification

• Description: A value determined after an exceptional situation arises during the FIFO valuation process. When the stock figure for a material to valuate exceeds the total quantity resulting from inward movements exceptions can be defined.

error-tolerant FIFO valuation - Details

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  Key Concepts: 
  Error-tolerant FIFO valuation is a method of inventory valuation used in SAP's Materials Management (MM) Invoice Verification component. This method is based on the First-In-First-Out (FIFO) principle, which states that the first items to enter inventory are the first items to be sold. The error-tolerant aspect of this method allows for a certain degree of inaccuracy in the calculation of inventory costs. 
  
  How to use it: 
  Error-tolerant FIFO valuation can be used in SAP's MM Invoice Verification component to calculate the cost of goods sold (COGS). This method is used to determine the cost of goods sold by taking into account the cost of goods purchased and any additional costs associated with the purchase, such as freight and handling. The cost of goods sold is then used to calculate the gross profit or loss for a given period. 
  
  Tips & Tricks: 
  When using error-tolerant FIFO valuation in SAP's MM Invoice Verification component, it is important to ensure that all costs associated with the purchase are accurately accounted for. This includes any additional costs such as freight and handling, as well as any discounts or other adjustments that may have been applied. Additionally, it is important to ensure that all inventory items are accurately tracked and accounted for in order to ensure accurate calculations. 
  
  Related Information: 
  Error-tolerant FIFO valuation is just one of many