Generally Accepted Accounting Principles (GAAP)
The standardized set of accounting rules, principles, and procedures used in the United States for consistent, transparent, and comparable financial reporting.
Generally Accepted Accounting Principles (GAAP)
The standardized set of accounting principles, standards, and procedures used in the United States for preparing financial statements, established by the Financial Accounting Standards Board (FASB) and other standard-setting bodies.
For instance, a public company in the U.S. must prepare its financial statements in accordance with GAAP, ensuring that revenue is recognized when earned and expenses when incurred, regardless of when cash changes hands.
GAAP provides the common language of accounting that allows investors, creditors, and other stakeholders to compare financial information across companies. It encompasses broad concepts and detailed practices, reducing variability in financial reporting and increasing transparency and reliability.