last in, first out
Quick Summary
LIFO, or "last-in, first-out," is an accounting method used for inventory valuation. This method assumes that the most recently acquired inventory items are the first ones to be sold. Consequently, the cost of these last-in items is used to determine the cost of goods sold, while the remaining inventory is valued at the cost of the older, earlier acquired items. This approach can be particularly useful in periods of rising prices, as it tends to report a lower net income and thus a lower tax liability compared to other inventory valuation methods like FIFO (first-in, first-out).123
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