Abstract
Historical cost accounting refers to the accounting method in which only the original costs of assets, liabilities, revenues or expenses are recognised. This means the method is silent as to the effects of depreciation, inflation, time value of money among other things. Much of the arguments for and against the historical cost accounting method can be divided into two, academic and practical reasons. The academic arguments resonate around issues of integrity and rationality while practical argument consider the fact that decision making uses accounting information and the overall need for accuracy in decision making. Its pros include the fact ...