0:00
All right, now we're with LIFO
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LIFO is kind of what you would expect from FIFO is the opposite. Kind of
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So last in, first out. The most recent ones that we purchase, and notice I'm saying most recent
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the most recent ones that we purchase are the first ones that we leave
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So let's look at the definition, if you will. This assumes that the cost flows in reverse order in which you purchased it
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Again, the most recent. It's not literally the last of the year, it's just the most recent of that purchase
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And that's important to understand. conceptually as the sales occur lifo charges cost of the most recent units acquired to cogs
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leaving the costs of the earliest purchases in inventory account i forgot to mention this at the
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very beginning if you want to add for new letters to lypho you can add fis h fish so it's really
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you have fifo lish and lypho fish fish being first in still here so last in first out first
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and still here the first ones we purchase are the ones that's still in our warehouse so let's look at
0:58
example again using Delta company again we have all these in our warehouse we sold
1:03
29 I don't care about where they came from because it's not worth it we're just making the assumption this is a last in first out so the first place I'm gonna
1:09
pull from is October 13th because this is the most recent purchase the last one
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I've had up to this point so I'm gonna pull as many of those as I can all of them
1:19
I still have somewhere I have to go so the next place I'm gonna draw from is
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going to be April 15th and to there I'm gonna draw up to that that leaves me 18
1:27
still in my warehouse and the 29 is on the outside so again it's just a different way that we go
1:32
about expensing these sold inventory again i don't care what the actual physical flow of these are
1:40
where they pulled them from it doesn't matter this is just the assumption that i made of how the
1:43
costs are flowing out but that's how you do life up appreciate it
