Historical Cost Accounting Principle is a standard accounting practice that involves recording business transactions at the original purchase price. Rather than using market prices, which may have changed since acquisition, this principle ensures accurate financial reports and allows businesses to measure their performance more accurately. This practice is especially important in volatile markets, where present values of assets can fluctuate wildly. By relying on historical cost information, companies can trust that their records reflect real figures, without being impacted by sudden spikes or dips in market trends.