LIFO
Also called: Last In First Out, last in first out
What is LIFO?
LIFO, or last in first out, assumes the most recently purchased stock is sold first, so cost of goods sold reflects recent prices and older costs remain in closing stock. It is a valuation convention rather than a physical practice.
Why LIFO matters
LIFO matches current costs against current revenue, which some businesses prefer when prices are rising. It is not permitted under Indian accounting standards, so it appears mainly in comparison and in imported textbooks.
How LIFO works in practice
Indian businesses generally use FIFO or weighted average. Understanding LIFO still helps when reading foreign financial statements or software defaults built for other markets.
Frequently asked questions
Not for statutory financial statements under Indian accounting standards.