Series 79: 3.4.2.1. LIFO

3.4.2.1. LIFO

The last in, first out (LIFO) method of inventory accounting assumes that the last items stocked are the first items sold. In terms of the inventory equation, LIFO uses the cost of the most recently acquired items of inventory to determine cost of goods sold.

LIFO may reflect earnings more accurately than FIFO in an inflationary environment, because as prices rise, the higher-priced items of inv