Final answer:
True. LIFO, or Last-In, First-Out, is indeed a historical cost method because it records assets and transactions at their original acquisition value without adjusting for current market values.
Step-by-step explanation:
The question 'LIFO is essentially a historical cost method.' can be considered true. LIFO, which stands for Last-In, First-Out, is a cost flow assumption under which it is assumed that the cost of goods sold is based on the most recent inventory purchases.
Consequently, the ending inventory is based on prices from the oldest inventory purchased. This method aligns with the historical cost principle, which records assets and transactions at their original acquisition costs. Unlike other methods that might adjust inventory costs based on current market values, LIFO retains the historical cost of inventory on the financial statements, unless that inventory is sold.