GAAP

Definition of GAAP as it relates to Business, Accounting Principles, Financial Statement Analysis

Generally Accepted Accounting Principles (GAAP) refer to a set of rules, standards, and practices that guide financial reporting in the United States. GAAP is used by businesses and other organizations to prepare their financial statements in a consistent, transparent manner that allows stakeholders to compare and analyze financial data across different entities. GAAP covers various aspects of accounting, including revenue recognition, balance sheet item classification, and materiality. Compliance with GAAP is mandatory for publicly traded companies in the US, and failure to follow these principles can result in legal consequences.

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