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LIFO vs. FIFOThe first thing is to know what LIFO and FIFO stand for and what it means. LIFO is last in first out this method assumes that the units that are to be sold are the most recent units that are to be purchased. The FIFO method stands for first in first out and this method is one that assumes that the units that are to be sold are the first ones that are acquired. The FIFO method is the inventory that is assumed to be sold is based on the number order in which they would be purchased. The difference of the LIFO and FIFO would be ones that are produce at the highest or lowest value of cost goods sold and the ending inventory depends on the pattern of the actual unit cost of changes during the certain period. In a certain period there are rising cost, FIFO would result in a lower cost of goods sold and then LIFO because of the lower cost of the earliest items are sold. LIFO would then mean the goods sold were the higher of cost of goods.