generally accepted accounting principles

Generally Accepted Accounting Principles - GAAP

The common set of accounting principles, standards and procedures that companies use to compile their financial statements. GAAP is a combination of authoritative standards (set by policy boards) and simply the commonly accepted ways of recording and reporting accounting information.

Investopedia Commentary

GAAP rules are imposed on so that investors have a minimum level of consistency in the financial statements they use when analyzing companies for investment purposes. GAAP rules cover such things as revenue recognition, balance sheet item classification, outstanding share measurements, and many others. Companies are expected to follow GAAP rules when reporting their financial data via financial statements. If a financial statement is not prepared using GAAP principles, be very wary!

That said, keep in mind that GAAP is only a set of standards. There is plenty of room within GAAP for unscrupulous accountants to distort figures. So even when a company uses GAAP, you still need to scrutinize its financial statements.

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A Case Study: Earnings Manipulation And The Role Of The Media

See also: Annual Report, Audit, Cook The Books, CPA, GAAS, International Accounting Standards-IAS

Also spelled: generally accepted accounting principles, generally-accepted accounting principles, fasbGAAP