What is LIFO Accounting?
Answer:
LIFO is a common method for 
recording the value of inventory or merchandise. LIFO is an acronym for “last in – first out.” Utilizing this method of inventory, the newest merchandise would be available to the consumer.

When restocking merchandise, the LIFO restocking method assures that the consumer will be provided with the newest merchandise. This is different from the FIFO restocking method where older items are usually pushed to the front of the shelves and become the first items selected by consumers. It may be appropriate to utilize both methods of restocking depending upon the type of merchandise.

Your profit and loss statement will be effected differently depending on whether you choose LIFO accounting or FIFO accounting. If you’re not sure which method is the best for your business, contact your accountant, or a tax attorney.
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