Historical Cost Principle

Introduction to Accounting

MS: Prinsip Kos Sejarah · EN: Historical Cost Principle · ZH: 历史成本原则

Meaning

The historical cost principle states that an asset is recorded at the actual cost paid when it was bought, not at its current market value. This cost stays in the records throughout the asset's life even if the market price changes. The principle makes records more objective and verifiable.

Example

Warna Printing Company buys a machine for RM20,000. Even though the machine's market price rises to RM25,000 the following year, it is still recorded at RM20,000.

Source: DSKP KSSM Prinsip Perakaunan Tingkatan 4

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