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Accounting
LIFO
Last-In, First-Out — the method of valuing inventory where the newest items are assumed to be sold first.
LIFO is allowed in the US but banned under IFRS. It better matches current costs with current revenues during inflation but can make the balance sheet show very old (cheap) inventory values.
It's like a stack of plates — you always take the one on top (the newest) first.
Real world: In times of rising prices, LIFO shows higher cost of goods sold and therefore lower profits, which can reduce taxes. Many US companies used LIFO for this reason before tax rules changed.
💡 LIFO saves taxes in inflationary times but can make your inventory look artificially cheap on paper.