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Simple English definitions for legal terms
last-in, first-out
Read a random definition: ad mordendum assuetus
A quick definition of last-in, first-out:
LAST-IN, FIRST-OUT: This is a way of keeping track of things that assumes that the last thing you got is the first thing you use or sell. It helps match the costs of things with the money you make from selling them. It's like eating the newest cookies first before the older ones.
A more thorough explanation:
Definition: Last-in, first-out (LIFO) is an accounting method that assumes the most recent purchases are sold or used first, matching current costs against current revenues.
For example, imagine a grocery store that sells bananas. The store receives a shipment of bananas every week. The bananas that were most recently delivered will be sold first, before the older bananas. This is because the newer bananas are assumed to have a higher cost, and the store wants to match those costs with the revenue they generate.
Another example is a warehouse that stores boxes of merchandise. When new boxes are delivered, they are placed on top of the older boxes. When it's time to ship out merchandise, the boxes that were most recently added to the stack will be shipped out first.
These examples illustrate the LIFO method because the most recent items are being used or sold first, which matches their current costs with current revenues.