FUNDAMENTALS OF ACCOUNTANCY,

BUSINESS & MANAGEMENT 1

Accounting Concepts and Principles

Quarter 3, Module 2
Fundamentals of Accountancy, Business & Management 1
Senior High School
Locally-Developed Module
Quarter 3- Module 2: Accounting Concepts and Principles
First Edition, 2021
Rabo, J.S, et al (2016). Fundamentals of Accountancy,
All rights reserved. No part of this module may be reproduced or transmit- Business and Management I. Quezon City. Vibal
ted to any form or by any means, electronic or mechanical, including pho- Group, Inc.
tocopying, recording, or by any information storage and retrieval system Published by the Commission on Higher Education,
without written permission from the publisher and authors.
2016 .Teaching Guide for Senior High School.
Published by the Schools Division Office (SDO) Dagupan City Quezon City. 4th Floor, Commission on Higher
OIC, Schools Division Superintendent: Aguedo C. Fernandez Education, C.P. Garcia Ave., Diliman.
Asst Schools Division Superintendent: Marciano U. Soriano, Jr.
Ong, F.L,(2014). Fundamentals of Accounting Textbook for
Beginners (forth edition). Quezon City. C & E
Publishing, Inc.

Development Team of the Module

Writer: Filipina Q. Calaunan
Editor: Mark Christopher C. Braganza
Reviewers: Reymond C. Villare
Renata G. Rovillos
Layout Artist: Michael Angelo C. Gatchalian
Management Team: Maria Linda R. Ventenilla
Edilberto R. Abalos
Renata G. Rovillos
Cherry A. Cayabyab
Rosalind R. Lomibao

Department of Education-SDO Dagupan City

Office Address: Burgos Street, Poblacion Oeste, Dagupan City
Telefax: (075) 515-6009
E-mail Address: dagupan.city@deped.gov.ph

27
 It’s time to check your answers!
Remember, honesty is important so
ACCOUNTING CONCEPTS AND PRINCIPLES
that you can effectively assess your
learning. Don’t feel pressured, I know
you did your best! Let’s now have a In this module the learners are able to identify generally
look at these answers for the Activity accepted accounting principles.
2, Activity 3 and Posttest.
In this module you will learn to:
• explain the varied accounting concepts and principles;
ABM_FABM11-IIIb-c-15

• solve exercises and accounting principles as applied in

15. A various cases. ABM_FABM11-IIIb-c-16

14. C
13. D
12. C 15. Materiality Principle In doing this module, the following
11. B 14. Objectivity Principle are some reminders:
10. D 13. Economic Entity Assumption
9. B 12. Time-Period Assumption 1. Take the pretest before
8. B 11. Accrual Basis Assumption answering the module.
7. D
2. Read the instructions carefully
10. Full Disclosure Principle 10. C
6. B 9. Cost Principle 9. B
5. D 8. Going Concern Assumption 8. A before doing each task.
3. Answer all the exercises.
4. B 7. Economic Entity Assumption 7. J
3. A 6. Economic Entity Assumption 6. G
2. A 5. Monetary Unit Assumption 5. F 4. Take the posttest.
5. Use a separate sheet in
1. C 4. Time-Period Assumption 4. E
3. Economic Entity Assumption 3. I
POSTTEST 2. Materiality Principle 2. H answering all the activities.
1. Objectivity Principle 1. D

ACTIVITY 3 ACTIVITY 2

26 1
Directions: Encircle the letter of the correct answer.
1. Recording the purchase price of a pencil sharpener (with an
estimated useful life of ten years) as an expense of the
current period is justified by the____.
A. going concern assumption
B. materiality constraint
C. matching principle
D. comparability principle
It’s time to check your answers!
Remember, honesty is important so
that you can effectively assess your
learning. Don’t feel pressured, I know
you did your best! Let’s now have a
look at these answers for the Pre-
Test , Activity 1 and Review.

2. The assumed continuation of a business entity in the absence

of evidence to the contrary is an example of the accounting
concept of_____.
A. accrual 15. TRUE 15. D
B. consistency 14. TRUE 14. B
C. comparability 13. FALSE 13. A
D. going concern 12. TRUE 12. A
11. TRUE 11. C
3. Financial statements combining the operations of Althea de 10. interpreting 10. TRUE 10. A
Guzman and Althea’s Flower Shop would violate the____. 9. summarizing 9. FALSE 9. C
A. monetary unit assumption 8. classifying 8. FALSE 8. D
B. economic entity assumption 7. recording 7. TRUE 7. C
C. cost principle 6. tax authorities 6. TRUE 6. B
D. ownership assumption 5. customers 5. FALSE 5. D
4. suppliers 4. TRUE 4. B
4. The requirement that only transaction data capable of being 3. owners 3. TRUE 3. B
expressed in terms of money be included in the accounting 2. employees 2. FALSE 2. D
records relate to the____. 1. managers 1. FALSE 1. B
A. cost principle REVIEW
B. monetary unit assumption ACTIVITY 1 PRETEST
C. economic entity assumption
D. both a and b above
2 25
12. Accountants prepare financial statements at arbitrary points
in time during a company’s lifetime in accordance with the 5. “GAAP” refers to___.
accounting concept of____. A. General Accounting and Auditing Principles
A. matching B.Guidelines for Accountants, Accounting Procedures
B. comparability C.General Association of Accounting Practitioners
C. accounting periods D.Generally Accepted Accounting Principles
D. materiality
6. Recording the purchase price of a chalkboard eraser (with an
13. The accrual basis of accounting is based primarily on____. estimated useful life of ten years) as an expense of the current
A.conservatism and revenue realization period is justified by the____.
B.conservatism and matching A.going concern assumption
C.consistency and matching B.materiality constraint
D.revenue realization and matching C.matching principle
D.comparability principle
14. The financial statements that are prepared for the business
are separate and distinct from the owners according to 7. Accountants prepare financial statements at arbitrary points in
the____. time during a company’s lifetime in accordance with the
A. going concern principle accounting concept of____.
B. matching principle A.matching
C. economic entity assumption B. comparability
D. full disclosure principle C. accounting periods
D. materiality
15. Conservatism is best described as selecting an accounting
alternative that_____. 8. The accrual basis of accounting is based primarily on____.
A.conservatism and revenue realization
A.understates assets and/ or net income B.conservatism and matching
B.has the least favourable impact on owner's equity C.consistency and matching
C.overstates, as opposed to understates, liabilities D.revenue realization and matching
D.is least likely to mislead users of financial information
9. The financial statements that are prepared for the business
are separate and distinct from the owners according to
the____.
A.going concern principle
B.matching principle
C.economic entity assumption
D.full disclosure principle
24 3
10. Conservatism is best described as selecting an accounting 8. Financial statements combining the operations of Althea de
alternative that_____. Guzman and Althea’s Flower Shop would violate the____.
A.understates assets and/ or net income A. monetary unit assumption
B.has the least favourable impact on owner's equity B. economic entity assumption
C.overstates, as opposed to understates, liabilities C. cost principle
D.is least likely to mislead users of financial information D. ownership assumption

11. Which of the following accounting principles would require 9. The requirement that only transaction data capable of being
that all goods and services purchased be recorded at cost? expressed in terms of money be included in the accounting
A.going-concern principle records relate to the____.
B.continuing-concern principle A.cost principle
C.cost principle B. monetary unit assumption
D.business entity principle C. economic entity assumption
D. both a and b above
12. The objectivity principle_____.
A.means that information is supported by independent, 10. “GAAP” refers to___.
unbiased evidence A. General Accounting and Auditing Principles
B. means that information can be based on what the preparer B. Guidelines for Accountants, Accounting Procedures
thinks is true C. General Association of Accounting Practitioners
C. means that the financial statements should contain D. Generally Accepted Accounting Principles
information that is optimistic
D. means that a business may not re-organize revenue until 11. Recording the purchase price of a chalkboard eraser (with
cash is received an estimated useful life of ten years) as an expense of the
current period is justified by the____.
13. The rule that requires financial statements to reflect the A.going concern assumption
assumption that the business will continue operating instead B.materiality constraint
of being closed or sold, unless evidence shows that it will not C.matching principl
continue, is the____. D.comparability principle
A.going-concern principle
B.business entity principle
C.objectivity principle
D.cost principle

4 23
 14. The principle that requires every business to be accounted for
4. The principle that requires every business to be accounted
the____.
for separately and distinctly from its owner or owners is
A.objectivity principle
known as the____.
B.business entity principle
A. objectivity principle
C.going-concern principle
B. business entity principle
D.revenue recognition principle
C. going-concern principle
D. revenue recognition principle
15. The accounting guideline that requires financial statement
information to be supported by independent, unbiased
5. The accounting guideline that requires financial statement
evidence other than someone’s belief or opinion is the____.
information to be supported by independent, unbiased
A.monetary unit principle
evidence other than someone’s belief or opinion is the____.
B.going-concern principle
A. monetary unit principle
C.cost principle
B. going-concern principle
D.objectivity principle
C. cost principle
D. objectivity principle

6. Recording the purchase price of a pencil sharpener (with an

estimated useful life of ten years) as an expense of the
current period is justified by the____.
A. going concern assumption
B. materiality constraint
C. matching principle
D. comparability principle

7. The assumed continuation of a business entity in the

absence of evidence to the contrary is an example of the
accounting concept of_____.
A. accrual
B. consistency
C. comparability
D. going concern

22 5
Directions: Answer the following questions. Write your answer on
Directions: Encircle the letter of the correct answer.
the space provided.
A. Give at least 3 internal users of accounting information 1. Which of the following accounting principles would require
that all goods and services purchased be recorded at cost?
1. _______________________
A.going-concern principle
2. ________________________ B.continuing-concern principle
3. ________________________ C.cost principle
D.business entity principle
B. Give at least 3 external users of accounting information
4. _______________________ 2. The objectivity principle_____.
A.means that information is supported by independent,
5. _______________________ unbiased evidence
6. _______________________ B. means that information can be based on what the preparer
thinks is true
C. Give the four aspects of accounting C. means that the financial statements should contain
7. _______________________ information that is optimistic
D. means that a business may not re-organize revenue until
8. _______________________ cash is received
9. _______________________
3. The rule that requires financial statements to reflect the
10. ______________________ assumption that the business will continue operating instead of
being closed or sold, unless evidence shows that it will not
continue, is the____.
A. going-concern principle
B. business entity principle
C. objectivity principle
D. cost principle
Well done! On the next
page, you will learn more...

6
21

We’re almost done! Here’s a
recap of what we have learned
today. Review them once again,
and get ready for the Post Test
on the next page! You’re doing
great! Keep it up!
• A widely accepted set of rules,
concepts, and principles referred to
as the Generally Accepted
Accounting Principles (GAAP)
governs the application of
accounting procedures.
• GAAP is exceedingly useful
because it attempts to standardize
and regulate accounting
definitions, assumptions and
methods.
20
ACCOUNTING CONCEPTS AND PRINCIPLES
Accounting is called the language of business. It
communicates the financial condition and performance of a
business to interested users for decision-making purposes.
Generally Accepted Accounting Principles (GAAP)
• These are broad, general statements or “rules” and “procedures”
that serve as guides in the practice of accounting.
• These are standards, assumptions, and concepts with general
acceptability
• These are measurement techniques and standards used in the
presentation and preparation of financial statements
UNDERLYING ACCOUNTING ASSUMPTIONS
1. Economic Entity Assumption
It assumes that all of the business transactions are
separated from the business owner’s personal transactions. A
business is considered a distinct entity from the owner and therefore
the two should be treated separately. Any personal transaction of its
owner should not be recorded in the company’s accounting book,
and vice versa, unless the owner’s personal transaction involves
investing or withdrawing resources from the business. Also,
accounting records of the business must not include the personal
assets or liabilities of the owner.
Examples:
• If the owner has a flower shop, the cash of the flower shop
should be reported separately from personal cash.
• The owner had a business meeting with a prospective client.
The expenses that come with that meeting should be part of the
company’s expenses. If the owner paid for gas for his personal
use, it should not be included as part of the company’s
expenses.
7
2. Accrual Basis Assumption
It requires that all business transactions and other events
are recognized in the accounting records when they occur, rather
than when the cash or cash equivalent or paid. It is assumed that
revenue is recorded in the period it is earned, regardless of the time
the cash is receive or collected. The same is true for expense.
Expense is recognized and recorded at the time it is incurred,
regardless of the time the cash is paid.
Example:
When a barber finishes performing his services he should record it
as revenue. When the barber shop receives an electricity bill, it
should record it as an expense even if it is unpaid.
3. Going Concern Assumption
In the absence of contrary information, a business entity is
assumed to remain in existence for an indeterminate period of time.
The current relevance of the historical cost principle is dependent on
the going concern assumption. This assumes that a company will
continue to exist long enough to carry out its objectives and
commitments and will not liquidate in the foreseeable future.
Because of this assumption, assets are recorded at their original
acquisition costs and not based on their market values. Assets are
assumed to be used for an indefinite period of time and not
intended to be sold immediately. It also allows the company to defer
some of its prepaid expenses until future accounting periods.
4. Monetary Unit Assumption
Economic activities of a Philippine entity are measured and
reported in Philippine peso. The peso is assumed to remain
relatively stable over the years in terms of purchasing power. It
disregards any inflation in the economy in which the entity operates.
It assumes that only transactions that can be expressed in terms of
money are recorded. Hence, any nonfinancial or nonmonetary
information that cannot be measured in terms of money are not
recorded in the accounting books. A memorandum will be used
instead.
8 19
______________12.Miko Uy Developers got a contract to develop
the five hectare Flora Heights Subdivision on January this year. At
the end of the year, Miko Uy Developers cannot determine its profit
or loss from the project as the accounting record for the project has
not yet been established. According tho the manager,development
is still in progress that is why the profit or loss on this endeavour
cannot be determined. However, in a span of twelve years,
accounting for this project will be presented after its expected
completion.
______________13. Manny Pacquaio is one of the richest athletes
in the world. As such, he operates many businesses. On the overall,
his businesses combined are yielding a net income although he
suspects that one or two of his businesses are incurring a net loss.
All business reports from Luzon, Visayas, and Davao, yield a profit.
However, he cannot pin point which particular business from what
specific area should be closed since the financial data of all the
businesses are consolidated on a per area basis. As such, different
businesses in Davao are reported under the Davao Business
financial statement. This holds true for businesses in Luzon and
Visayas.
______________14. The Philippine government is known for its
under the table “lagay” system. In order to record this unsupported
expenses, Sincere Corporation summed up all its undocumented
under the table transactions with the government officials under the
account title ”Facilitation Expenses”.
______________15. Purchased a hammer at a cost of PHP500.
This was recorded as an asset and expense to decrease its value
by PHP50 per year for 10 years.

______________8. St. Benjamin’s Hospital has been serving the
community for twenty years. However, since new hospitals such as
Saint Look’s Medical Center and Metropolotan City Medical Center
have opened in the area, St. Benjamin’s Hospital felt the stiff
competition. The stockholders are suggesting upgrading the
hospital’s equipments and infusing more capital. However, the
management of St. Benjamin’s declines the approval because of the
belief that the hospital will lose the competition and that it is ready to
stop operations anytime to avoid losses. Hence, the accounting
department is operating based on this assumption.
______________9. Susana Ong owns Magnificent Gel’s Candle
shop. She proposes to account for the shop’s asset at current
market value in order to have realistic amounts on the books should
she decide to liquidate the business anytime.
_____________10. Panda Airlines entered into an agreement with
Cathy Pacific to transfer the ownership of forty of its one hundred
Boeing 747 for one billion dollars. Panda Airline will receive 10% of
the amount next month. However, Panda Airline did not report this
undertaking as no amount has been received. Panda airlines feel
this is a wise move in order to generate cash in the business.
____________11. St. Luis University starts its fiscal June and ends
in May. The accountant received its utilities bill for the month of May
from Maynilad. Since this will be paid on the second week of June,
the accountant recorded it as expenses under the month it was
paid.
18
Examples:
• The purchase of equipment by Milton’s Repair Shop in 1990
are combined 9or shown) with the purchase of equipment in
2018. Also, if the business introduced a new repair service
which can not be easily quantified in monetary units then
these would not appear in the company’s accounting records
• Jollibee should report financial statements in pesos even if
they have an store in the United States.
• IHOP should report financial statements in dollars even if they
have a branch here in the Philippines.
5. Time-Period Assumption
The life of an economic entity can be divided into into arti-
ficial time periods for the purpose of providing periodic reports on
the economic activities of the entity. It means that financial state-
ments are prepared at equal time intervals. This assumption re-
quires a business to complete the whole accounting process of a
business over a specific period time. It may be monthly, quarter-
ly, or annually. For an annual accounting period, it may follow a
calendar or fiscal year.
A. Calendar year– a twelve-month period that starts on January
1 and ends on December 31.
B. Fiscal year– are twelve-month period that starts on any month
of the year other than January and ends twelve months after
the start period. (e.g. A business whose fiscal year starts June
1, 2018 ends its fiscal year on May 32, 2019. This is still a
twelve-month period although it does not start in January and
end in December. A natural business year is any twelve-
month period that ends when business activities are at their
lowest point.
It is very important that the time interval (or period of time)
be shown in the heading of each financial statement if the state-
ment covers one week ended December 31, 2014; the month
ended Dec. 31, 2014; three months ended December 31, 2014; or
the year ended December 31, 2014.
9
Examples:
• Philippine companies are required to report financial statements
annually
• The salary expense from January to December 2018 should only
be reported in 2018.
BASIC ACCOUNTING PRINCIPLE
1. Cost Principle
Cost refers to the amount spent (cash or the cash equivalent)
when an item was originally obtained, whether that purchase
happened last year or ten years ago; amount are not adjusted upward
for inflation. The amounts shown in financial statements are referred
to as historical cost amounts. All assets acquired should be valued
and recorded based on the actual cost equivalent or original cost of
acquisition, not the prevailing market value or future value
Examples
• When Jollibee buys a cash register, it should record the cash
register at its price when they bought it.
• When a company purchases a laptop, it should be recorded at the
price it was purchased.
2. Full Disclosure Principle
In the preparation of financial statements, the accountant
should include sufficient information to permit the stakeholders to
make an informed judgement about the financial condition of the
enterprise. If certain information is important to an investor or lender
using the financial statements, that information should be disclosed
within the statement or in the notes to the statement. A company
usually lists its significant accounting policies as the first note to its
financial statements.
10
Activity 3
I. Directions: Indicate which principles are violated. Write your
answer on the blank space provided.
______________1. A food company ordered a machine needed in
the assembly line of its production department. Upon order, the
machine was immediately listed as one of its assets.
______________2. Purchased a hammer at a cost of PHP500. This
was recorded as an asset and expense to decrease its value by
PHP50 per year for 10 years.
______________3. Aside from owning a shoe store, Alfred
operates a canteen. The assets of the canteen are reported in the
statement of financial position of the shoe store.
______________4. No financial statements were prepared by
Anthony Tan for his business. He explained that he will prepare the
statements when he closes the business, which he predicts to take
place after 20 years.
______________5. The statement of financial position of a
company included an equipment purchased from Japan for 350,000
yen. It was reported at that amount in the statement of financial
position while all the other assets were reported in Philippine pesos.
______________6. The owner-manager bought a computer for
personal use. The invoice was given to the accountant who
recorded it as an asset of the business.
______________7. Mr. Edgar Quijano founded Saints Enterprises.
He treated his residence and other personal assets as part of Saints
Enterprises.
17
Activity 2
3. Matching Principle
I. Directions: Match the following words with their definition This principle requires that expenses be matched with
revenues. It means that in a given accounting period, the revenue
A. going concern principle F. cost principle recorded should have an equivalent expense recorded, in order to
B. objectivity principle G. disclosure principle show the true profit of the business. The use of accrual accounting
C. matching principle H. monetary unit principle procedures assists the accountant in allocating revenues and
D. materiality principle I. accrual accounting principle expenses properly among the fiscal periods that compose the life of a
E. time period principle J. conservatism principle business enterprise.

__________________1. Minimal costs incurred should be recorded Example:

as an expense.
__________________2. A Philippine company should report
financial statements in pesos
__________________3. A barber who performs services for a client
should record revenue.
__________________4. Statement of Financial position should be
recorded as of December 31, 2015.
__________________5. A company that purchases furniture should
record it at its acquisition price.
__________________6. All relevant information should be included
in the financial reports.
__________________7. In case of doubt, assets and income
should not be overstated.
• When you provide tutorial services to a customer and there is a
transportation cost incurred related to the tutorial services, it
should be recorded as an expense for that period.
• Sales salaries expense should be reported in the period when the
sales were made (and not reported in the period when the
salaries were paid). Wages to Althea’s Flower Shop employees
are reported as an expense in the week when the employees
worked and not in the week when the employees are paid.
Electricity consumed in December 2018 paid on January 7 , 2019
should be reported as utility expense in 2018 income statement
and the amount unpaid at December 31, 2018 should be reported
as a liability in the statement of financial position.
4. Revenue Recognition Principle
Revenues are recognized as soon as goods have been sold
(delivered to the customers) or a service has been rendered,
regardless of when the money is actually received. Revenue is
recognized when the earning process is virtually complete and an
exchange transaction has occurred.

__________________8. Assume that the company will continue Example:

indefinitely. On July 24, Milton’s Repair Shop rendered service to a client for
__________________9. All transactions should be supported by P10,000. The service fee was collected on Aug 5. The entity should
unbiased evidence. record the revenue of P10,000 in July, the time service was rendered
__________________10. Expenses should be recorded in the to the customer, and not the time cash was received.
period when the revenue is generated.
16 11
5. Materiality Principle
Business transactions that may affect the decision of a user of
financial information are considered important or material, and thus, ________9. The owner of Magical Laundry Shop bought a
must be reported properly. Because of this constraint, an accountant residential dwelling for his parents. The cost of the house is
might be allowed to violate another accounting principle if an amount recorded a property of the business.
is insignificant. Professional judgement is needed to decide whether
an amount is insignificant or immaterial. Ten thousand pesos may not ________10. GAAP is a widely accepted set of rules, concepts
be material to Ayala Corporation but the same figure is quite material and principles that govern the application of the accounting
to a small business like Milton’s Repair Shop. procedures.
Example:
- A school purchased an eraser with an estimated useful life of three ________11. Accrual basis assumption adheres to the revenue
years. Since an eraser is immaterial relative to assets, it should be recognition, matching, and cost principles.
recorded as an expense.
- An example of an obviously immaterial item is the purchase of a ________12. Accounting is the systematic process of measuring
P300 paper puncher by a company. The estimated useful life of the and reporting relevant financial information about the activities of
paper puncher is five years. The matching principle directs the an economic organization or unit.
accountant to expense the cost over the five-year period. The
materiality guideline allows this company to violate the matching ________13. In case of doubt, conservatism principle leads the
principle and to expense the entire cost of P300 in the year it is accountant to overstate assets and income while the liabilities and
purchased. The justification is that no one would consider it expenses are understated.
misleading if P300 is expensed in the first year instead of P60 being
expensed in each of the five years that it is used. ________14. Full disclosure principle states that all material facts
that will significantly affect the financial statements must be
indicated.
6. Conservatism Principle
This principle states that given two options in the valuation of ________15. Consistency means that all approaches used in
business transactions, the amount recorded should be the lower reporting must be consistently employed from period to period.
rather than the higher value. If a situation arises where there are two
acceptable alternatives for reporting an item, conservatism directs the
accountant to choose the alternative that will result in less effect on
net income and/or less asset amount. Conservatism helps the
accountant break a tie while remaining unbiased and objective.
Similar to materiality principle, conservatism is a modifying constraint
that allows the accountant to violate another accounting principle if
there are alternatives to be selected. The basic accounting principle of
conservatism leads accountant to anticipate or disclose losses, but it

12 15

Activity 1
Directions: On the space provided before each number, write
TRUE if the statement is correct and FALSE if the statement is
wrong.
________1. Cash paid for expenses still to be incurred is
recognized as expense under the accrual method of accounting.
________2. Materiality principle states that the requirements of any
accounting principle may be ignored when there is an effect to the
users of financial information.
________3. Cost is more definite and determinable than other
valuation methods.
________4. Users of financial reports expect that accounting
information is reliable, verifiable, and objective.
________5. Going concern assumes that financial statements are
prepared only once at the end of the economic life of the entity.
________6. The monetary unit assumption assumes that the
monetary unit used in recording business transaction is stable.
________7. Accountants must use their judgment to record
transactions that require estimation. Conservatism principle should
be applied by the accountants in exercising judgment.
________8. Financial statements are prepared at the end of the 12
-month period because of the going concern assumption.
14
does not allow a similar action for gains. Losses and costs are
recorded when they are probable and can be reasonably estimated,
while gains are recorded when they are realized. Thus, probable
losses from lawsuits will be reported on the face of financial
statements or in the notes, but probable gains will not be reported.
7. Objectivity Principle
This principle requires business transactions to have some
form of impartial supporting evidence or documentation. Also, it
entails that bookkeeping and financial recording be performed with
independence, that is free from bias and prejudice.
Example:
• When the customer paid Jollibee for their order, Jollibee should
have a copy of the receipt to represent as evidence.
• When a company incurred a transportation expense, a voucher
should be prepared as evidence.
• When a company incurred a transportation expense, a voucher
should be prepared as evidence.
13