HISTORICAL COST ACCOUNTING Definition

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HISTORICAL COST ACCOUNTING is an accounting principle requiring all financial statement items to be based on original cost. It is usually based upon the dollar amount originally exchanged in an arms-length transaction; an amount assumed to reflect the fair market value of an item at the transaction date.

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CAPITAL INVESTMENT see CAPITAL EXPENDITURE.

EXPENSES are the daily costs incurred in running and maintaining a business. See expenditure.

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