GAAP_Reliability_True and Fair_Objectivity 一般公认会计原则.pdf

GAAP-Reliability/True and Fair/Objectivity This discussion focuses on the objectives, description and application of this principle. Examples will be given to strengthen the understanding and capability to apply this principle at real situation. Objective: To ensure all the information included in the financial statements must be supported by independent, verifiable evidence. Description: Decision makers, both internal and external, use financial statement information as basis for various decisions. It is important to ensure that this financial information is reasonably free from error and bias and that the company is presenting a clear picture of what really happened with their company. Application: In order to follow the reliability principle, accountants should only record information into the accounting system which can be verified by objective evidence. Examples of objective evidence are documents such as receipts, invoices, canceled checks, bank statements etc... Sometimes in the accounting process, estimates may be required in some situations. To conform to the reliability principle in these situations, the accountant must take extra effort to demonstrate that the estimate is free of bias, was made by a qualified and completely independent person, and conforms as closely as possible to known objective evidence. Financial statements are not reliable if, by the selection or presentation of information, they are intended to influence the making of a decision or judgment in order to achieve a predetermined result or outcome. Information that is reliable can be verified independently and repeatedly. Independent auditor will test and verify that the financial information reported is accurate, reliable, and represents what it claims to represent so that financial statement users can depend on it to make financial decisions. Example: A company purchased a building for $1,000,000 in Year 1. In Year 2, the real estate price skyrocketed a