The impact on net income depends on how the price of inventories has changed over time. First In, First Out (“FIFO”): Under FIFO accounting, the goods that were purchased earlier are recognized first and expensed on the income statement first.Last In, First Out (LIFO): Under LIFO accounting, the most recently purchased inventories are assumed to be the ones to sold first.LIFO and FIFO are the top two most common accounting methods used to record the value of inventories sold in a given period. reduced to zero) and is completely removed from the balance sheet.
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