Question

The principle that there must be an evidentiary basis, such as an invoice or receipt, for most assets and liabilities is also known as the ____________.

Answer 1

The documentation principle requires an evidentiary basis, like invoices or receipts, for financial transactions in assets and liabilities, ensuring financial integrity and auditability as part of GAAP.

Step-by-step explanation:

The principle that there must be an evidentiary basis, such as an invoice or receipt, for most assets and liabilities is also known as the documentation principle. This principle requires companies and individuals to have a written or electronic record that substantiates the financial transactions represented in their accounting records. Having this evidentiary support is crucial for financial integrity and auditability, as it ensures that all financial statements can be corroborated with actual, tangible evidence. This is part of generally accepted accounting principles (GAAP), which help standardize and regulate accounting practices to provide accurate and consistent financial information.