FIFO and LIFO Calculator — Compare Stock Valuation Methods
Enter your purchases in the order they came in and the units issued — see cost of goods sold and closing stock under FIFO, LIFO and weighted average.
| Lot (oldest first) | Quantity | Rate (₹) | Value | |
|---|---|---|---|---|
| ₹5,000.00 | ||||
| ₹11,000.00 | ||||
| ₹9,000.00 |
Result
450 units costing ₹25,000.00 · 300 issued · 150 in closing stock
| Method | Cost of goods sold | Closing stock value |
|---|---|---|
| FIFO | ₹16,000.00 | ₹9,000.00 |
| LIFO | ₹17,250.00 | ₹7,750.00 |
| Weighted average (₹55.56/unit) | ₹16,666.67 | ₹8,333.33 |
In India, AS 2 and Ind AS 2 allow FIFO or weighted average for the accounts; LIFO is shown for comparison only.
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Quick answer
FIFO (First In, First Out) charges issues at the oldest purchase rates, so closing stock is at the latest prices. LIFO (Last In, First Out) charges the newest rates first, so closing stock is at old prices. In India, AS 2 and Ind AS 2 allow FIFO or weighted average — LIFO is not permitted for financial statements.
| FIFO | First In, First Out — issues at oldest rates |
|---|---|
| LIFO | Last In, First Out — issues at newest rates |
| Allowed in India (AS 2 / Ind AS 2) | FIFO and weighted average; not LIFO |
| Cost | Free — no sign-up, runs in your browser |
When the same item is bought at different prices, every issue or sale raises a question: which price does it go out at? FIFO and LIFO are the two classic answers, and weighted average is the third. The choice changes both the cost of goods sold and the value of the closing stock.
When prices are rising, FIFO gives a lower cost of goods sold and a higher closing stock; LIFO gives the opposite. The calculator below shows all three side by side for your own figures.
The formula
- FIFO
Issue units from the oldest lots first; closing stock = newest lots- LIFO
Issue units from the newest lots first; closing stock = oldest lots- Weighted average rate
Total cost of all lots ÷ Total quantity- Closing stock value
Total cost of lots − Cost of goods sold
A worked FIFO and LIFO example
Opening stock 100 kg at ₹50, then purchases of 200 kg at ₹55 and 150 kg at ₹60 — 450 kg costing ₹25,000 in all. 300 kg are issued.
FIFO issues 100 kg at ₹50 and 200 kg at ₹55: cost of goods sold ₹16,000, closing stock ₹9,000. LIFO issues 150 kg at ₹60 and 150 kg at ₹55: cost of goods sold ₹17,250, closing stock ₹7,750. Weighted average is ₹55.56 a kg: cost of goods sold ₹16,667, closing stock ₹8,333.
Full form of FIFO and LIFO
FIFO stands for First In, First Out — the material received first is treated as issued first. LIFO stands for Last In, First Out — the most recent receipt is treated as issued first. Physically, most stores issue the oldest stock first anyway to avoid ageing and expiry; the methods are about how the issue is costed.
FIFO and LIFO in accounting in India
Accounting Standard AS 2 and Ind AS 2 (Valuation of Inventories) permit FIFO or weighted average cost, and specific identification for items that are not interchangeable. LIFO is not allowed for financial statements, and income-tax computation follows the same standards (ICDS II). LIFO is still useful as an internal what-if — it shows how much rising prices are flattering profit under FIFO.
Whatever method is chosen must be applied consistently. An ERP that records the rate of every receipt can value stock by FIFO or weighted average automatically, for each item and warehouse.
Questions people ask.
What is the full form of FIFO and LIFO?
FIFO is First In, First Out; LIFO is Last In, First Out. They decide which purchase price an issue or sale is charged at.
What is the difference between FIFO and LIFO?
FIFO charges issues at the oldest rates, leaving closing stock at recent prices. LIFO charges issues at the newest rates, leaving closing stock at old prices. With rising prices, FIFO shows higher profit and stock value.
Is LIFO allowed in India?
No, not for financial statements. AS 2 and Ind AS 2 allow FIFO, weighted average cost, or specific identification. LIFO can only be used for internal analysis.
Which is better, FIFO or weighted average?
Both are permitted. FIFO keeps closing stock close to current prices; weighted average smooths price swings and is simpler when the same item is bought often at slightly different rates.
How is FIFO used in accounting?
Each issue is costed from the oldest unexhausted purchase lot first. When that lot is used up, the next oldest lot's rate applies.
Does the valuation method change the profit?
Yes, when prices change. The method moves cost between cost of goods sold (this period's profit) and closing stock (carried to the next period).
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