Discover the importance of LIFO Reserve in accounting, including its calculation, comparison with FIFO, and impact on taxes.

FIFO (first in, first out) and LIFO (last in, first out) are inventory management and accounting techniques designed to add consistency to the sales and accounting functions of business, respectively.

There are two methods of accounting for inventory that affect a business's reported profits and taxable revenues: FIFO and LIFO. FIFO, first-in first-out, keeps the first inventory stocked on the ...