How does LIFO-FIFO-FILO differ?

Three is better than one.

Today, I would like to speak again about some “strange” words that are necessary know when someone would like work into manufacturing.

LIFO, FIFO, and FILO are three different methods of inventory accounting used in business. The main differences between these methods are:

1. LIFO (Last In, First Out): This method assumes that the most recent items added to the inventory are the first ones sold. In other words, the items that were purchased last are the first ones to be sold. LIFO is commonly used when prices are rising, as it results in a higher cost of goods sold and lower taxable income.

2. FIFO (First In, First Out): This method assumes that the oldest items in inventory are the first ones sold. In other words, the items that were purchased first are the first ones to be sold. FIFO is commonly used when prices are falling, as it results in a lower cost of goods sold and higher taxable income.

3. FILO (First In, Last Out): This method assumes that the oldest items in inventory are the last ones sold. In other words, the items that were purchased first are the last ones to be sold. FILO is not commonly used in practice, as it can be difficult to track and manage inventory under this method.

Overall, the choice between LIFO, FIFO, and FILO depends on the specific needs and goals of the business, as well as the prevailing market conditions.