FIFO accounting

First in, first out (FIFO) accounting is a method for assessing the value of inventory , in which the first purchased items are assumed to be the first ones sold or disposed of. FIFO accounting typically increases the recorded value of inventory and results in a higher net income than if LIFO were used. FIFO may lead to higher income taxes , but also helps new businesses get loans on better terms .

See LIFO accounting (contrast).

[Last reviewed in December of 2022 by the Wex Definitions Team ]

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