Cost flow methods are accounting techniques used to value inventory and determine the cost of goods sold. The main methods include First-In, First-Out (FIFO), Last-In, First-Out (LIFO), and Weighted Average Cost. Each method affects financial statements differently, impacting profits and taxes. Under the FIFO method, the oldest inventory costs are used first, which can lead to higher profits during inflation. In contrast, LIFO uses the most recent costs first, often resulting in lower taxable income. The Weighted Average Cost method averages all inventory costs, providing a middle ground between FIFO and LIFO.