last in first out method

last in first out method (LIFO) is an inventory management method used by businesses to track the cost of goods sold (COGS). Under LIFO, the most recent inventory items purchased are the first ones sold. This method is commonly used during periods of inflation, as it allows businesses to match the current higher costs of goods with revenue, thereby reducing taxable income. LIFO can have an impact on profit reporting and tax obligations, making it important for businesses to understand its implications in their accounting practices.