LIFO and FIFO are popular and often used abbreviations. LIFO means “last in, first out” while FIFO means “first in, first out.” These are terms that are commonly employed in the field of inventory control, cost accounting and also in the field of computer science.
When used in inventory control, LIFO and FIFO just means reminders on how to handle certain items or merchandise. LIFO is used for products that have a no sell by date, or if it does, it is still a long ways off, for example, canned goods. On the other hand, for products like eggs and milk, restocking happens from the back. This means that the old stocks are pushed in front and are the ones sold immediately. This is a FIFO method and it is used for products that have a sell-by date or are quite perishable. In a store or grocery, both LIFO and FIFO are used in handling inventory.
In the world of accounting, LIFO and FIFO refers to the ways of putting value on the existing inventory and also in trying to figure out the profits. There are retailers that make it a point to stock a type of item just once and even if it is sold, they may not carry it again. This is particularly true for items that are fads and also on fashion items that usually change from season to season. Other retailers, however, would stock particular items for a time and continue to replenish when their stocks run low. This is where FIFO and LIFO also come in.