FIFOLIFOperiaatteet

FIFOLIFOperiaatteet, an acronym for "First In, First Out, Last In, First Out," refers to two distinct inventory management methods used in accounting and operations. The FIFO method assumes that the first inventory items purchased are the first ones sold. This means the cost of the oldest inventory is matched against revenue. Under FIFO, the remaining inventory on hand is valued at the cost of the most recently purchased items. This method generally reflects the actual physical flow of goods for many businesses, especially those dealing with perishable items or goods with a limited shelf life.

In contrast, the LIFO method assumes that the last inventory items purchased are the first ones sold. This means the cost of the most recent inventory is matched against revenue. Consequently, the remaining inventory on hand is valued at the cost of the oldest items. LIFO is often used for tax purposes in countries where it is permitted, as it can result in lower taxable income during periods of rising prices by matching higher, more recent costs against current revenues. However, LIFO does not typically reflect the physical flow of inventory. The choice between FIFO and LIFO can significantly impact a company's reported profitability and tax liability, and the method chosen must be applied consistently over time.