Materials
LIFO (Last-In, First-Out)
An inventory valuation method where the most recently acquired stock is sold or used first.
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Updated 2025-10-01
Definition
LIFO assumes that the newest inventory is consumed first, which can impact cost of goods sold and tax calculations.
Overview
Overview
LIFO is commonly used in accounting for industries with rising prices, affecting financial statements and inventory reporting.
Benefits
- Matches current costs with current revenues
- Reduces taxable income in inflationary periods
Example
A retailer sells the latest shipment of electronics first, while older stock remains in the warehouse for later sales.
Tags
#LIFO#Inventory Valuation#Accounting#Materials#Stock Management
Related Terms
FIFO (First In, First Out)
Inventory Management
Perpetual Inventory System
