last-in, first-out definition by American Heritage Dictionary
A method of inventory accounting in which the most recently acquired items are assumed to have been the first sold. In a period of rising prices, this method yields a lower ending inventory, a higher cost of goods sold, a lower gross profit (assuming constant price), and a lower taxable income. Also called LIFO.
An inventory accounting method that uses the price of
the most recently purchased goods as the cost basis for cost of goods sold.
During periods of inflation, LIFO produces higher costs, reduced profits, and
reduced taxes paid on profits. LIFO contrasts with FIFO (first in, first
out), another inventory accounting method that uses the prices of goods
that were purchased first to calculate cost of goods sold.