Lifo (Noun)
Meaning
Inventory accounting in which the most recently acquired items are assumed to be the first sold.
Classification
Nouns denoting acts or actions.
Examples
- The company used the lifo method to value its inventory, which resulted in a higher cost of goods sold during the period of rising prices.
- The accountant applied the lifo method to determine the cost of the inventory sold, which was more in line with the current market prices.
- The lifo method of inventory valuation assumes that the most recently purchased items are the first to be sold, which can affect the company's profit margins.
- The company's use of the lifo method was justified by the fact that its inventory was constantly being replenished with new items, making it likely that the most recent purchases were the first to be sold.
- The lifo method is often used in industries where inventory is sold on a first-in, last-out basis, such as in the sale of perishable goods.