Which financial accounting rule states that financial transactions must be recorded at their original acquisition cost rather than current market value?

Explanation

• The Historical Cost Principle dictates that assets, services, and liabilities are initially recorded at their actual purchase price or acquisition cost.
• Historical cost provides objective, verifiable evidence of transaction value, preventing subjective valuation estimates on financial statements.
• Market values may fluctuate over time, but historical cost remains unchanged unless specific revaluation rules or impairment write-downs apply.