The objectivity principle:
A)Means that information is supported by independent,unbiased evidence
B)Means that information can be based on what the preparer thinks is true
C)Means that financial statement should contain information that is optimistic
D)Means that a business may not recognize revenue until cash is received
E)Means the assets acquired must be recorded and what the company paid for them

Question

Quizplus · Accepted Answer

The objectivity principle states that information presented in financial statements should be supported by independent, unbiased evidence. This ensures that the information presented is reliable and trustworthy. Option B is incorrect because financial statements should not be based on the preparer's personal beliefs or opinions. Option C is incorrect because financial statements should be neutral, not optimistic or pessimistic. Option D is incorrect because revenue recognition is governed by its own principles, and the objectivity principle applies to all financial statement information. Option E is incorrect as it refers to the cost principle rather than the objectivity principle.

The Objectivity Principle