The four main inventory valuation methods are FIFO (first-in, first-out), LIFO (last-in, first-out), specific identification, and average costing. FIFO assumes the oldest inventory items are sold first and uses those costs. LIFO assumes most recent items are sold first and uses those latest costs, which can save on taxes during periods of rising prices. Specific identification tracks each purchase individually to match actual costs to revenues. Average costing assigns a cost based on the total cost of goods purchased divided by the total number of items.