The cost concept of the accounting emphasizes that the financial transactions of the business should be recorded in real expenditure or cost price. According to this concept, the fixed assets and liabilities of the firm should be recorded in the books of account at an actual price. i.e. the price paid for its acquisition rather than its market price. in practice, the value of fixed assets may fluctuate with the course of time and thus the market value does not indicate the real position. due to this reason, cost price is considered rather than its frequent changeable market price. Therefore, the cost concept assumes that all the financial events should be recorded at their cost price, not at market price.