Dictionary of all accounting terms
Generally accepted accounting principles or GAAP refers to the standardized rules and regulations of accounting that businesses must adhere to when they compile their financial statements.
GAAP should not be mixed up with International Financial Reporting Standards or IFRS which dictates international accounting standards that companies must follow.
In the United States, GAAP provides the framework within which financial records need to be recorded by companies both big and small.
GAAP sets the minimal accounting standards that have to be followed by enterprises. This helps ensure consistency and makes it easier for investors to assess the financial health of companies within the United States.
Here are the 10 general principles that make up the GAAP -