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LSDefine

Simple English definitions for legal terms

LIFO accounting

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A quick definition of LIFO accounting:

Term: LIFO accounting

Definition: LIFO accounting is a way to figure out how much a company's inventory is worth. It assumes that the last items bought are the first ones sold. This method usually makes the inventory look like it's worth less, which can help the company pay less in taxes. It's the opposite of FIFO accounting, which assumes the first items bought are the first ones sold.

A more thorough explanation:

LIFO accounting

Last in, first out accounting. It is a way of calculating the value of inventory, where the items that were most recently purchased are assumed to be the first ones sold. This method typically lowers the recorded value of inventory and helps businesses avoid paying higher income taxes due to inflation. It is the opposite of FIFO accounting.

Let's say a store has 10 units of a product in stock. They purchased 5 units for $10 each a month ago and 5 units for $12 each yesterday. If they sell 7 units today, according to LIFO accounting, they would assume that the 5 units purchased yesterday and 2 units purchased a month ago were sold. Therefore, the cost of goods sold would be $5 x $12 + $2 x $10 = $64.

Another example could be a car dealership that has 20 cars in stock. They purchased 10 cars for $20,000 each a month ago and 10 cars for $22,000 each yesterday. If they sell 15 cars today, according to LIFO accounting, they would assume that the 10 cars purchased yesterday and 5 cars purchased a month ago were sold. Therefore, the cost of goods sold would be $10 x $22,000 + $5 x $20,000 = $230,000.

These examples illustrate how LIFO accounting assumes that the most recently purchased items are the first ones sold, which can result in a lower recorded value of inventory and lower income taxes.

LIFO | like-kind property

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MIAMI A
[] AromaticTroubledDormouse
20:55
How does one know if they are UR1 or UR2?
[] AromaticTroubledDormouse
20:56
CONGRATS MACAQUE!
TY
got a random stanford email and almost had a heart attack
ALSO CONGRATS!
Congrats1!
21:15
Miami A, yall I'm so excited I could cry.
21:15
Feel like I can finally stop holding my breath!! Whew!!!
[] baddestbunny
22:16
every time I get accosted by a strange man who follows me around because my male coworkers were too busy talking to walk me back to my car I get closer to saying we need to bring back traditional gender roles
Dkk
22:32
Nice! @Macaque
Dkk
22:32
@Aromatic, Have to guess.
Dkk
22:33
That sucks @Bunny do you have to go to the hospital?
[] baddestbunny
22:40
I said accosted not assaulted
23:35
guys. my notre dame address just went long is this good or bad
1a2b3c4d26z
23:37
Oooooo me too
23:37
omg is this good or bad
Dkk
23:47
Idk if gender roles are gunna fix that then.
23:49
it looks like most people who applied in october last cycle didn't get a decision until january... does it even mean anything that our addresses went long??
hows ED 2 compared to ED 1?
Dkk
0:10
No idea
windyMagician
0:34
reporting live to say my ndls address also went long
does it mean anything ^
Dkk
2:21
NDLS and Fordham took a very long time last year. It's good info for people to know.
[] baddestbunny
4:29
let’s get after it boys and girls
Dkk
5:21
I gtg to bed soon.
Dkk
5:22
Big day today. Gunna be a crazy one. I will sleep through the first half.
good morning lsd it is 5 am EST
also jazzy my ndls address went long ages ago i sadly do not think it means anything
my stanford address also went long LOL i think at most it's an indicator it's under review
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