The Cost Method Of Accounting is a method of accounting whereby assets and liabilities are recognized as part of a company’s financial statements at the original cost. This method does not take into account any subsequent changes in market values or costs associated with the acquisition or disposal of assets. Instead, these may be adjusted for income tax purposes only. This allows businesses to accurately reflect their current financial position, enabling them to make more informed decisions about their operations. In the end, it all comes down to one simple concept: Knowing where you stand financially can save you from costly – and sometimes irreversible – mistakes.