LIFO

LIFO means "Last-In, First-Out." Imagine you have a box of toys. When you add new toys to the box, LIFO says that the last toys you added are the first ones you use or sell. It's like eating the last cookies you bought first.

Companies use LIFO to figure out how much it costs to sell things. If they added new products to their collection, LIFO says they sold those new things first, and the cost of those new things is what they count.

Now, LIFO is often used by companies that deal with things that don't get old or spoiled quickly. Think of stuff like oil, gas, wood, or other basic materials. It's like saying if you buy wood to make furniture, the last batch of wood you bought is what you assume you used first when selling your furniture.