GAAP Objectivity Principle Flashcards
1
Q
GAAP Objectivity Principle
A
- Accounting will be recorded based on objectivity evidence
- Based on fact, not evidence
- Ensures that different people looking at evidence will reach same conclusion
- Best way to get objective evidence: source document
2
Q
Source Document
A
- A business paper or document that verifies the transaction and dollar amount (a.k.a. “Original Record”)
- Accounting entries are recorded from - - - Source Documents
- Source Documents are kept on file for reference and proof of transactions (i.e. to check for errors or if audited)
- EXAMPLE: Phone bills, store receipts, cheque copies, purchase orders, pay stub.
3
Q
Transaction
A
- Any event that affects the assets or liabilities of a company (may alter the financial position of a company)
- How are Assets, Liabilities & Equity affected by these transactions?
- NOTE: At least TWO accounts must ALWAYS be affected
