Advantages and Disadvantages of Historical Cost Accounting
Advantages
- Historical cost accounts are straightforward to produce
- Historical cost accounts do not record gains until they are realized
- Historical cost accounts are still used in most accounting systems
Disadvantages
- Historical cost accounts give no indication of current values of the assets of a business
- Historical cost accounts do not record the opportunity costs of the use of older assets, particularly property which may be recorded at a value based on costs incurred many years ago
- Historical cost accounts do not measure the loss of value of monetary assets as a result of inflation.
Read more about this topic: Historical Cost
Famous quotes containing the words advantages, historical, cost and/or accounting:
“The respect for human rights is one of the most significant advantages of a free and democratic nation in the peaceful struggle for influence, and we should use this good weapon as effectively as possible.”
—Jimmy Carter (James Earl Carter, Jr.)
“Some of us still get all weepy when we think about the Gaia Hypothesis, the idea that earth is a big furry goddess-creature who resembles everybody’s mom in that she knows what’s best for us. But if you look at the historical record—Krakatoa, Mt. Vesuvius, Hurricane Charley, poison ivy, and so forth down the ages—you have to ask yourself: Whose side is she on, anyway?”
—Barbara Ehrenreich (b. 1941)
“The true reformer does not want time, nor money, nor coöperation, nor advice. What is time but the stuff delay is made of? And depend upon it, our virtue will not live on the interest of our money. He expects no income, but outgoes; so soon as we begin to count the cost, the cost begins. And as for advice, the information floating in the atmosphere of society is as evanescent and unserviceable to him as gossamer for clubs of Hercules.”
—Henry David Thoreau (1817–1862)
“At the crash of economic collapse of which the rumblings can already be heard, the sleeping soldiers of the proletariat will awake as at the fanfare of the Last Judgment and the corpses of the victims of the struggle will arise and demand an accounting from those who are loaded down with curses.”
—Karl Liebknecht (1871–1919)