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FIFO vs LIFO: Key Differences Explained [2026 Guide]
Two stores can buy the exact same products at the exact same prices, sell the exact same number of units, and still report different profits. The reason is not creative accounting. It is the inventory valuation method they chose: FIFO or LIFO. The method decides which costs flow into your cost of goods sold and which stay on the balance sheet as ending inventory, and that single choice ripples through your gross profit, your tax bill and how your business looks on paper. This guide explains what FIFO and LIFO actually mean, walks through the same sale under both methods so you can see the gap in real numbers, and helps you decide which one fits an online retail business.