What is FIFO and LIFO in stock management ?

FIFO (First In, First Out) and LIFO (Last In, First Out) are two common inventory management methods used to determine the cost of goods sold and the value of a company's inventory.

Differences between FIFO and LIFO:

FIFO	LIFO
The cost of the oldest inventory is recognized as cost of goods sold.	The cost of the most recent inventory is recognized as cost of goods sold.
Assumes that the oldest inventory is sold first.	Assumes that the most recent inventory is sold first.
Inventory values will be higher.	Inventory values will be lower.
Cost of goods sold will be lower.	Cost of goods sold will be higher.
Income tax liability is lower.	Income tax liability is higher.

Conclusion:

FIFO and LIFO are both inventory management methods that determine the cost of goods sold and the value of a company's inventory. FIFO assumes that the oldest inventory is sold first, while LIFO assumes that the most recent inventory is sold first. This difference in assumption leads to different values for inventory and cost of goods sold, as well as different income tax liabilities. Both methods have their own advantages and disadvantages, and companies should carefully consider which method is most appropriate for their specific situation.