Generally Accepted Accounting Principles (GAAP)
📈 Investing
Quick Definition
Generally Accepted Accounting Principles (GAAP) are a set of rules and standards used in the United States for financial reporting and accounting. They ensure consistency, comparability, and transparency in financial statements.
Examples
- 1A company preparing its financial statements must follow GAAP to accurately report its financial position to stakeholders.
- 2An auditor reviews a company's financial statements to ensure they are in compliance with GAAP, enhancing trust among investors.
- 3GAAP requires companies to use the accrual basis of accounting, which records revenues and expenses when they are earned, not when cash is exchanged.
Tags
accountingfinancial-reportingstandardsUScompliance
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Income Statement
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Quick Info
Category:Investing
Difficulty:intermediate
Last Updated:6/19/2025