firstinlastout

First in last out (FILO) is a method of inventory accounting and cost flow that assumes the oldest stock, i.e., the items that entered inventory first, will be the last to be used or sold. Consequently, the most recently acquired goods are used first, and the ending inventory comprises the oldest costs. In practice, FILO results in cost of goods sold reflecting newer prices and ending inventory valued at older prices. The effect is generally equivalent to last in, first out (LIFO) in many accounting contexts, though some jurisdictions treat FILO as a distinct label.

Under accounting standards, FILO is not universally distinguished from LIFO; many frameworks treat FILO as a variant of LIFO for measurement purposes. IFRS, for example, does not permit LIFO-style cost flow, which means FILO would typically be inappropriate under IFRS. In jurisdictions that permit LIFO, FILO can influence tax liabilities, gross margin, and inventory valuation.

Implementing FILO typically requires tracking cost layers and may be challenging for companies with large volumes or frequent price changes. It is most likely to be encountered in inflationary environments or in historical discussions of cost flow methods rather than as a widely adopted standard in modern financial reporting.

Notes: FILO is sometimes used interchangeably with LIFO in casual discussion, but the precise terminology and regulatory treatment depend on the jurisdiction and accounting framework. It should not be confused with FIFO, which assigns the oldest costs to cost of goods sold.