LIFO


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LIFO

Last In, First Out

In accounting, a technique for valuing inventory by treating inventory acquired most recently as if it were sold first. The sale of inventory is recorded against the purchase price of the most recently acquired inventory, even if the physical goods are not the same. In times of high inflation, the last-in, first out technique reduces a business' inflation risk. It also may reduce one's tax liability. For these reasons, most American firms have used this technique in their accounting since the 1970s.

LIFO

LIFO

  1. see REDUNDANCY.
  2. STOCK VALUATION.

Last In, First Out (LIFO)

An accounting method for valuing inventories for tax purposes. Under this method, the last items purchased are treated as being the first items sold. Ending inventory is valued using the cost of the items with the earlier purchase dates.
References in periodicals archive ?
Excluding LIFO and various special items in both years, adjusted operating income escalated 31.
In addition, using a non-LIFO method to calculate and report a financial forecast is not a violation of the LIFO conformity role, as forecasts are speculative and do not report actual income, profit, or loss (Rev.
Although IFRS has far more disclosure requirements than GAAP, companies following GAAP have disclosures on inventory classification, accounting policy, cost basis, and LIFO disclosure, if necessary.
GAAP converges to IFRS inventory methods without exception, then this will effectively eliminate LIFO for U.
The focus of the adjustments will be the found in the LIFO reserve balance that the company reported because of its use of LIFO.
On the income statement, the use of the LIFO method typically overstates the cost of goods sold and thus understates gross profits, operating profits, and net profits.
But some experts think it will be politically easier for Congress to repeal LIFO now that the SEC announced its intention to require U.
The results of the study indicated that multinational companies generally chose LIFO for their inventory valuation method.
Boyle concluded, "the LIFO method has provided for the proper matching of revenues and expenses in the computation of the cost of goods sold and taxable profits, especially in periods of rising prices.
LIFO has tested and assessed a vast range of people in the past year and surveys have illustrated that people with massive ability often have no commitment or drive, whereas there are average intellect staff who put in massive efforts to improve themselves and their colleagues.
LIFO delivers a more current figure for cost of goods sold or cost of sales, but a less current inventory valuation.
Returning to that former assignment to discuss the methods of inventory costing: You would probably quickly identify FIFO, LIFO, weighted average, and specific identification.