FIFO vs LIFO

So, when it comes to valuing inventory, you've got these two main approaches, FIFO and LIFO. FIFO basically means the first stuff that came in is the first stuff that goes out, so your ending inventory is valued at the most recent costs. LIFO, on the other hand, assumes the last items you bought are the first ones you sell, which can leave your ending inventory with older, potentially lower costs. It really just boils down to how you track what's moving in and out of your stock. Different companies pick one based on what makes the most sense for their business and financial reporting.