LIFO provides a better match of current expenses to revenues on the income statement, while FIFO provides a better ending inventory figure by more closely reflecting current costs.

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LIFO (Last-In, First-Out) assumes that the most recently purchased inventory items are sold first, which matches current costs to current revenues on the income statement. However, it can result in an outdated inventory value on the balance sheet. FIFO (First-In, First-Out) assumes that the oldest inventory items are sold first, which tends to result in a better estimation of ending inventory at current costs, but can lead to a mismatch of expenses and revenues on the income statement.

LIFO Provides a Better Match of Current Expenses to Revenues