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What is NIFO?

NIFO is the acronym for next-in, first-out.

NIFO is a cost flow assumption, just as FIFO and LIFO are cost flow assumptions. However, NIFO is not acceptable for financial reporting since it calls for a future cost. NIFO is sometimes used as an expression of replacement cost.

Even though NIFO cannot be used for valuing inventory and the cost of goods sold on the financial statements, it is useful for making decisions. For example, some companies will use NIFO when determining selling prices.