What is the meaning of 'historical cost accounting'?

Answer 1

Historical cost accounting is an accounting concept that states that all assets in the financial statement should be reported based on their original cost . Example : James buys a building for $2,000,000 ten years ago, the value of the building now is $3,000,000 but in James's accounting records, the building is still recorded as $2,000,000 (less depreciation). No account is taken of the increase in value.

Answer 2

Historical cost accounting refers to an accounting method that records assets at their original purchase price, rather than their current market value. It is based on the concept that financial transactions should be recorded at their actual cost at the time of acquisition. This method provides a clear and objective way to measure and report financial information, but it may not always accurately reflect the true value and economic condition of a company's assets.