diff --git a/erpnext/stock/tests/test_valuation.py b/erpnext/stock/tests/test_valuation.py
new file mode 100644
index 0000000..d415af3
--- /dev/null
+++ b/erpnext/stock/tests/test_valuation.py
@@ -0,0 +1,121 @@
+import unittest
+
+from erpnext.stock.valuation import FifoValuation, _round_off_if_near_zero
+
+
+def rate_generator():
+	return 0.0
+
+class TestFifoValuation(unittest.TestCase):
+
+	def setUp(self):
+		self.queue = FifoValuation([])
+
+	def tearDown(self):
+		qty, value = self.queue.get_total_stock_and_value()
+		self.assertTotalQty(qty)
+		self.assertTotalValue(value)
+
+	def assertTotalQty(self, qty):
+		self.assertEqual(sum(q for q, _ in self.queue), qty, msg=f"queue: {self.queue}")
+
+	def assertTotalValue(self, value):
+		self.assertEqual(sum(q * r for q, r in self.queue), value, msg=f"queue: {self.queue}")
+
+	def test_simple_addition(self):
+		self.queue.add_stock(1, 10)
+		self.assertTotalQty(1)
+
+	def test_simple_removal(self):
+		self.queue.add_stock(1, 10)
+		self.queue.remove_stock(1, 0, rate_generator)
+		self.assertTotalQty(0)
+
+	def test_merge_new_stock(self):
+		self.queue.add_stock(1, 10)
+		self.queue.add_stock(1, 10)
+		self.assertEqual(self.queue, [[2, 10]])
+
+	def test_adding_negative_stock_keeps_rate(self):
+		self.queue = FifoValuation([[-5.0, 100]])
+		self.queue.add_stock(1, 10)
+		self.assertEqual(self.queue, [[-4, 100]])
+
+	def test_adding_negative_stock_updates_rate(self):
+		self.queue = FifoValuation([[-5.0, 100]])
+		self.queue.add_stock(6, 10)
+		self.assertEqual(self.queue, [[1, 10]])
+
+
+	def test_negative_stock(self):
+		self.queue.remove_stock(1, 5, rate_generator)
+		self.assertEqual(self.queue, [[-1, 5]])
+
+		# XXX
+		self.queue.remove_stock(1, 10, rate_generator)
+		self.assertTotalQty(-2)
+
+		self.queue.add_stock(2, 10)
+		self.assertTotalQty(0)
+		self.assertTotalValue(0)
+
+	def test_removing_specified_rate(self):
+		self.queue.add_stock(1, 10)
+		self.queue.add_stock(1, 20)
+
+		self.queue.remove_stock(1, 20, rate_generator)
+		self.assertEqual(self.queue, [[1, 10]])
+
+
+	def test_remove_multiple_bins(self):
+		self.queue.add_stock(1, 10)
+		self.queue.add_stock(2, 20)
+		self.queue.add_stock(1, 20)
+		self.queue.add_stock(5, 20)
+
+		self.queue.remove_stock(4, 0, rate_generator)
+		self.assertEqual(self.queue, [[5, 20]])
+
+
+	def test_remove_multiple_bins_with_rate(self):
+		self.queue.add_stock(1, 10)
+		self.queue.add_stock(2, 20)
+		self.queue.add_stock(1, 20)
+		self.queue.add_stock(5, 20)
+
+		self.queue.remove_stock(3, 20, rate_generator)
+		self.assertEqual(self.queue, [[1, 10], [5, 20]])
+
+	def test_collapsing_of_queue(self):
+		self.queue.add_stock(1, 1)
+		self.queue.add_stock(1, 2)
+		self.queue.add_stock(1, 3)
+		self.queue.add_stock(1, 4)
+
+		self.assertTotalValue(10)
+
+		self.queue.remove_stock(3, 1, rate_generator)
+		# XXX
+		self.assertEqual(self.queue, [[1, 7]])
+
+	def test_rounding_off(self):
+		self.queue.add_stock(1.0, 1.0)
+		self.queue.remove_stock(1.0 - 1e-9, 0.0, rate_generator)
+		self.assertTotalQty(0)
+
+	def test_rounding_off_near_zero(self):
+		self.assertEqual(_round_off_if_near_zero(0), 0)
+		self.assertEqual(_round_off_if_near_zero(1), 1)
+		self.assertEqual(_round_off_if_near_zero(-1), -1)
+		self.assertEqual(_round_off_if_near_zero(-1e-8), 0)
+		self.assertEqual(_round_off_if_near_zero(1e-8), 0)
+
+	def test_totals(self):
+		self.queue.add_stock(1, 10)
+		self.queue.add_stock(2, 13)
+		self.queue.add_stock(1, 17)
+		self.queue.remove_stock(1, 0, rate_generator)
+		self.queue.remove_stock(1, 0, rate_generator)
+		self.queue.remove_stock(1, 0, rate_generator)
+		self.queue.add_stock(5, 17)
+		self.queue.add_stock(8, 11)
diff --git a/erpnext/stock/valuation.py b/erpnext/stock/valuation.py
index 80e5d37..42a122f 100644
--- a/erpnext/stock/valuation.py
+++ b/erpnext/stock/valuation.py
@@ -128,7 +128,7 @@
 
 def _round_off_if_near_zero(number: float, precision: int = 7) -> float:
 	"""Rounds off the number to zero only if number is close to zero for decimal
-	specified in precision. Precision defaults to 6.
+	specified in precision. Precision defaults to 7.
 	"""
 	if abs(0.0 - flt(number)) < (1.0 / (10 ** precision)):
 		return 0.0