FIFO vs. LIFO Inventory Accounting: Which Method Saves More Tax & Boosts Profit?
FIFO records the oldest inventory costs first; LIFO records the newest ones first. That simple sequence flip drives all downstream tax and profit numbers. Imagine two coffee shops buying beans at $5, then $7. FIFO sells the cheap $5 beans first, inflating taxable profit. LIFO sells the pricey $7 beans first, trimming profit and tax….