Final answer:
The concept of Trey Monson starting a merchandising business on December 1 using the FIFO method is about managing inventory by selling the oldest items first. This method helps prevent merchandise from becoming obsolete or spoiling.
Step-by-step explanation:
The concept of Trey Monson starting a merchandising business on December 1 using the FIFO (First-In, First-Out) method refers to the way Trey will manage the inventory of his business. FIFO is an accounting method where the first items purchased or produced are the first ones to be sold or used. In Trey's case, it means that he will sell the oldest merchandise first before moving on to the newer ones.
For example, if Trey purchases 50 T-shirts on December 1 and 100 more on December 15, following the FIFO method, when he makes a sale on December 10, he will sell the T-shirts from the first batch (the ones purchased on December 1) before touching the newer ones.
Using the FIFO method helps to ensure that the merchandise in the inventory does not become obsolete or spoil, as it encourages the timely sale of older items before newer ones.