Last in first out (L.I.F.O.)
“LIFO” stands for last-in, first-out, meaning that the most recently produced items are recorded as sold first.
Since the 1970s, some U.S. companies shifted towards the use of LIFO, which reduces their income taxes in times of inflation, but since International Financial Reporting Standards (IFRS) banned LIFO, more companies returned to FIFO.
LIFO is used only in the United States, which is governed by the generally accepted accounting principles (GAAP). Section 472 of the Internal Revenue Code directs how LIFO may be used.