Last In, First Out (LIFO)

Accounting Corporate Finance Financial Terms Dictionary

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Last in, first out (LIFO) is the method used to account for inventory.

Under LIFO, the costs of the most recent products purchased (or manufactured) are expensed first.
LIFO is used only in the US and is governed by generally accepted accounting principles (GAAP).
Other inventory accounting methods include the first-in-first-out (FIFO) method and the average cost method.
Using the LIFO method usually reduces net income, but is more tax-efficient when prices rise.