“I don’t know how it works. You just keep taking damage and keep firing.”
Definition/Summary:
Accounting
- Method of inventory valuation based on the assumption that goods are sold or used in the opposite chronological order in which they are bought
- The cost of goods purchased first (first-in) is the cost of goods sold last (last-out)
FIFO and LIFO
- Methods used in managing inventory and financial matters involving the amount of money a company has tied up within inventory of produced goods, raw materials, parts, components, or feed stocks
- They are used to manage assumptions of cost flows related to inventory, stock repurchases (if purchased at different prices), and various other accounting purposes