LIFO

An inventory accounting method that assumes the most recently purchased goods are sold first.

LIFO, Last In First Out, assumes the newest inventory a company buys is the first to be sold, so cost of goods sold reflects more recent, often higher, prices while older, cheaper costs remain on the balance sheet. In periods of rising prices, LIFO reports lower profits and lower taxes than FIFO, which is why it's popular in the U.S. but banned under international accounting standards.

During the inflation spike, LIFO let the company report lower taxable profit by assuming it sold its newest, priciest inventory first.