GAAP

Definition of GAAP as it relates to Business, Accounting Principles, External Audit

Generally Accepted Accounting Principles (GAAP) refers to a set of standardized accounting rules and guidelines established by the Financial Accounting Standards Board (FASB). These principles are widely used in the business world to govern financial reporting, ensuring that all companies represent their financial transactions consistently. GAAP encompasses various areas such as revenue recognition, balance sheet item classification, and materiality, among others. By adhering to GAAP, external auditors can verify a company's financial statements accurately, providing investors and stakeholders with confidence in the organization's financial health.

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