LIFO RESERVE

Difference between the First In, First Out (FIFO) inventory and Last In, First Out (LIFO) inventory in accounting. The figures signify the amount of a company’s taxable income has been reduced by using LIFO method in its financial statements rather than FIFO accounting method. The LIFO reserve increases as the prices of the product rises, too, as noted in the balance sheet. To ensure accuracy, this is calculated by the time they adopted the LIFO method.

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