Objectivity Principle GAAP
Previously we studied about the Cost Principle GAAP , but here we are concerned with Objectivity Principle GAAP. What Does Objectivity Mean in Accounting? According To Objectivity Principle “There should be factual and definite basis for the valuation of assets”. For Example, if an entrepreneur purchased land for business use, then there should be factual and definite basis for the valuation of the cost of the land. The estimated market’s value of land is not the definite or factual value so this value is not objective, because the market’s value is constantly changing. In Accounting, Objectivity means that the information presented in Financial Statements And Reports must be free from any influence that makes it biased. There is no Conflicts of Interests which means no interested party tries to get their own benefits by influencing the information presented in Financial Statements and Financial Reporting. To do ...