ECONOMICS

Detailed explanation-1: -LIFO stands for “Last-In, First-Out”. It is a method used for cost flow assumption purposes in the cost of goods sold calculation. The LIFO method assumes that the most recent products added to a company’s inventory have been sold first. The costs paid for those recent products are the ones used in the calculation.

Detailed explanation-2: -The last in, first out, or LIFO (pronounced LIE-foe), accounting method assumes that sellable assets, such as inventory, raw materials, or components, acquired most recently were sold first. The last to be bought is assumed to be the first to be sold using this accounting method.

Detailed explanation-3: -For a lower tax bill, businesses should use the LIFO inventory valuation method. This method assumes the newest inventory is sold first. Since the newest inventory is sold first, the COGs would increase because the newest inventory is more expensive.

Detailed explanation-4: -The last in, first out (LIFO) accounting method assumes that the latest items bought are the first items to be sold. With this accounting technique, the costs of the oldest products will be reported as inventory.

Detailed explanation-5: -First In, First Out, commonly known as FIFO, is an asset-management and valuation method in which assets produced or acquired first are sold, used, or disposed of first. For tax purposes, FIFO assumes that assets with the oldest costs are included in the income statement’s cost of goods sold (COGS).