Principle of objective evidence

Definition and Explanation

Principle of objective evidence (or principle of objectivity) states that no accounting record should be made unless it is supported by independently verifiable (i.e., objective) evidence. Generally, such evidence is in writing or should be reduced to writing before an accounting entry is made. All transactions must be evidenced by a document, e.g., cash sales are evidenced by cash memos, credit sales by invoices, payments through bank by check etc.

Purchase of things of larger value like land, building, motor vehicles, etc. is generally supported by elaborate legal documentation like title deeds, sale deed etc.

If the principle of objective evidence is not adhered to, the accounting records will lose their credibility and financial statements will fail to portray the true picture of the business.

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