LIFO
Business & Finance abbreviation · Accounting
| Stands for | Last in, first out |
|---|---|
| Categories | Business & Finance |
LIFO stands for Last in, first out, an accounting abbreviation also used in technology.
Inventory costing method that assumes the most recently acquired units are sold first, so cost of goods sold reflects the latest prices. When prices rise, LIFO lowers reported profit and taxable income, which is why some US companies use it.
Example: Switching to LIFO cut the retailer's taxable income by $30 million during the inflationary year.
Usage notes
LIFO is permitted under US GAAP but prohibited under IFRS. The US "LIFO conformity rule" requires companies that use LIFO for tax to use it in their financial statements too. Companies disclose a "LIFO reserve," the difference between LIFO and FIFO inventory values, so analysts can compare them.
Related abbreviations
More accounting abbreviations
- IASB – International Accounting Standards Board
- ICFR – Internal control over financial reporting
- IFRS – International Financial Reporting Standards
- IPSAS – International Public Sector Accounting Standards
- JE – Journal entry
- LCM – Lower of cost or market
- MD&A – Management's discussion and analysis
- MoM – Month over month
- MTD – Month to date
- MTM – Mark-to-market
- NBV – Net book value
- NCI – Non-controlling interest