In 2026, most operations carry two versions of the truth on inventory. The warehouse system tracks quantities. The accounting system tracks values. The two get reconciled at month-end by a controller plus a warehouse manager sitting in a conference room trying to figure out why the books show 1.2 million in inventory plus the floor count says 1.05 million. The variance gets booked as an adjustment. The auditor asks how it happened. Nobody can answer because the cost layer was rebuilt by hand instead of recorded at the moment goods moved.

The damage is more than the year-end adjustment. Under FIFO, every receipt should layer on top of the existing cost stack. Under LIFO, the newest layer comes off first when goods ship. Weighted Average rolls the cost into a single running figure that updates with each transaction. None of that math works retroactively. The moment a receipt or return is not valued at the time it happened, the cost layer drifts, plus the drift compounds for the rest of the period.

Stock Valuation closes the gap by valuing every transaction at the moment it lands. A goods receipt triggers a layer update under the method that SKU runs on. A return triggers a reversal. A stock transfer between warehouses carries the cost layer with the movement. The balance sheet inventory line reflects what the warehouse holds plus what those goods actually cost to acquire.

Each SKU carries its own cost method assignment. Some businesses run FIFO across the board for tax reporting. Other industries run LIFO on commodity inputs plus FIFO on finished goods, with the methods coexisting under one roof. Many companies pick Weighted Average for everything because it simplifies the books. Stock Valuation supports all three simultaneously. The cost engine reads the method on each SKU plus applies the right math at the moment a transaction posts.

FIFO works as a stacked layer model. Each receipt adds a layer at the unit cost from that receipt. When stock ships out, the oldest layer drains first. LIFO runs the same model in reverse: shipments pull from the newest layer. Weighted Average recalculates the running unit cost on every receipt by weighting the new units against the existing balance. Every transaction logs the method, the layer affected, plus the resulting value change. The audit trail shows exactly how today's number was built from the history of receipts plus shipments.

Batch plus lot-level valuation runs underneath the method choice. A SKU under FIFO can also carry batch identity so a recall on Batch 4422-A reports the exact unit cost of the affected units. Snapshots capture the full valuation state at user-defined points (month-end, quarter-end, year-end) so the books a controller closed in March can be reproduced in November without anyone reconstructing the math.