Definition of LIFO

LIFO

The last-in, first-out method of inventory cost determination. Assumes that cost of goods
sold is comprised of newer goods, the last goods purchased or manufactured by the firm.

Last-In-First-Out (LIFO)

A method of valuing inventory that uses the cost of the most recent item in
inventory first.

LIFO (Last-in-first-out)

The last-in-first-out inventory valuation methodology. A method of valuing
inventory that uses the cost of the most recent item in inventory first.

LIFO (Last In, First Out)

An inventory valuation method that presumes that the last units received were the first ones
sold.

Last-in, first-out (LIFO)

An inventory costing methodology that bases the recognized cost of
sales on the most recent costs incurred, while the cost of ending inventory is based
on the earliest costs incurred. The underlying reasoning for this costing system is
the assumption that goods are sold in the reverse order of their manufacture.

Last-In, First-Out (LIFO) Inventory Method

The inventory cost-flow assumption that assigns the most recent inventory acquisition costs to cost of goods sold. The earliest inventory
acquisition costs are assumed to remain in ending inventory.

LIFO Dipping

Reducing lifo inventory quantities and, as a result, including older and lower
costs in the computation of cost of sales, resulting in an increase in earnings.

LIFO Liquidation

A reduction in the physical quantity of an inventory that is accounted for
using the lifo inventory method.

Last-in, first-out (LIFO)

An inventory valuation method under which one assumes that the
last inventory item to be stored in a bin is the first one to be used, irrespective of
actual usage.

Inventory

For companies: Raw materials, items available for sale or in the process of being made ready for
sale. They can be individually valued by several different means, including cost or current market value, and
collectively by FIFO, lifo or other techniques. The lower value of alternatives is usually used to preclude
overstating earnings and assets.
For security firms: securities bought and held by a broker or dealer for resale.

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