Definition and Explanation
The principle of objective evidence (or principle of objectivity) states that no accounting record should be created 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. For example, cash sales are evidenced by cash memos, credit sales by invoices, and payments through the bank by check.
Purchase of larger value such as land, building, and vehicles are generally supported by elaborate legal documentation, including title deeds, sale deeds, and so on.
If the principle of objective evidence is not adhered to, the accounting records will lose their credibility, and financial statements will fail to present a true picture of the business.