HISTORICAL COST CONVENTION Definition

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HISTORICAL COST CONVENTION is that assets are recorded at their initial cost and are not subsequently revalued upwards, and liabilities valued at the amount initially received in exchange for the obligation. The relevance of the convention is that figures remain objectively based on verifiable figures, but in times of high inflation historical cost can become a dubious convention to follow.

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CONCENTRATION RISK is the risk that an investor will suffer from lack of diversification, investing too heavily in one industry, one geographic area or one type of security.

MISAPPROPRIATON is a nonviolent criminal taking of property. Includes embezzlement, theft, and fraud. Often applied to an employee's taking of an employer's property.

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