About the LIFO Costing Method

A stack of receipts is maintained to stock for each item and quantities in the stack are consumed when an item is issued from stock. This consumption is done from the newest to oldest cost if LIFO is being used, and from the oldest to the newest if FIFO is being used. Each receipt to stock includes unit cost details and quantities (in order by date and time) for each Item Location Inventory account.

This stack is added to and subtracted from as follows:

• When you receive a quantity into stock from a purchase receiving transaction, job completion, or miscellaneous receipt, the receipt quantity and cost is added to the bottom of the stack.
• When you receive a quantity into stock from an order return, stock adjustment, cycle count posting, or material withdrawal, the quantity received is added to the current quantity in the last record of the LIFO file.
• When you issue a quantity to a job or ship a quantity to a customer, the latest (last-in) costs are used and the stack is reduced by the value of the items issued/shipped.

The Unit Cost field on the Items form shows the next cost at which to issue the item. When you use LIFO, the system posts the receipt cost to the Unit Cost field on the Items form each time you process a new receipt.