Historical Cost Accounting is an accounting framework that values assets and liabilities at their original cost when they were initially purchased. This accounting method requires keeping a record of all past costs incurred as part of running a business. In straightforward terms, businesses using Historical Cost Accounting adhere to the principle: what has been paid for something is its value. This method of accounting provides companies with an accurate record of their costs over time so that decision makers can better understand the financial implications of their decisions. Ultimately, businesses can use this information to drive results by making informed decisions that optimize their resources and maximize their profits.