Mark-to-market accounting

Mark-to-Market accounting is an accounting method where assets and liabilities are valued based on their current market prices, rather than their historical costs. This approach reflects the true value of these items at a given moment, providing a more accurate financial picture of a company. For example, if a company's investment in stocks increases in value, Mark-to-Market accounting updates the company's financial statements to show this increase. While it allows for real-time valuation, it can also introduce volatility, as market prices fluctuate frequently, affecting reported earnings and financial health.