historical-cost accounting

Related to historical-cost accounting: Replacement cost accounting

historical-cost accounting

n
(Accounting & Book-keeping) a method of accounting that values assets at the original cost. In times of high inflation profits can be overstated. Compare current-cost accounting
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While historical-cost accounting may have delayed the delivery of some market information on distressed companies, there are a lot of sources of information.
assets by using historical-cost accounting in the years leading up to
be more complex, for historical-cost accounting can only
As this incident reveals, the historical-cost accounting system has
Historical-cost accounting is liberal with liabilities and tight with assets.
Historical-cost accounting intentionally puts the onus on conservative measurement so that the worst-possible scenario will be reported as the financial position.
Relevance of historical-cost accounting versus fair-value accounting.
With the emphasis of accounting shifting to the income statement, other accounting principles like objectivity and matching were used to support historical-cost accounting.
On the other hand, criticisms of historical-cost accounting had also been prevalent.
After the two World Wars, historical-cost accounting was also under attack by the public due to the fact that inflation had become more important.
Under the historical-cost accounting model, the investor has not realized a loss, even though the economic value of the investments has declined.
These outcomes are a consequence of the transaction-oriented, historical-cost accounting framework, under which gains and losses on investments are often reported only at the time they are sold.

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