Last in, first out (LIFO) accounting is a method for assessing the value of inventory, in which the most recently purchased items are assumed to be the first ones sold or disposed of. LIFO accounting typically lowers the recorded value of inventory and results in a lower net income than if FIFO were used. LIFO helps businesses avoid a higher income tax due to inflation.
[Last updated in July of 2023 by the Wex Definitions Team]