generally accepted accounting principles (redirected from Generally accepted accounting practice)

Generally Accepted Accounting Principles (GAAP)

The overall conventions, rules, and procedures that define accepted accounting practice at a particular time in the U.S.

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generally accepted accounting principles (GAAP)

Guidelines and rules for use by accountants in preparing financial statements. These principles, which evolved over a period of years, are designed to help ensure that financial data are presented fairly and are comparable from firm to firm and from industry to industry. In expressing an opinion on financial statements, certified public accountants are required to stipulate whether their statements have been prepared according to generally accepted accounting principles.

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Generally accepted accounting principles (GAAP). Generally accepted accounting principles (GAAP), which are the basis for financial reporting by the private sector in the United States, have been codified by the Financial Accounting Standards Board (FASB) into a single authoritative source.

The codification is designed to strengthen the economic system by organizing standards from various sources into approximately 90 accounting topics and providing uniform criteria for communicating data. The code is scheduled for final adoption at the end of 2008 following a one-year verification period.

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generally accepted accounting principles (GAAP)

(pronounced “gap”) Established by the Financial Accounting Standards Board (FASB), these are the guidelines for proper accounting practices.

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Generally Accepted Accounting Principles (GAAP)

What Does Generally Accepted Accounting Principles (GAAP) Mean?

The overriding accounting principles, standards, and procedures that companies follow when compiling their financial statements. GAAP is a combination of authoritative standards (set by policy boards) and the commonly accepted ways of recording and reporting accounting information.

Investopedia explains Generally Accepted Accounting Principles (GAAP)

Companies use GAAP to standardize their financial statements so that investors can better use those statements to analyze a company for investment purposes. GAAP covers things such as revenue recognition, balance sheet item classification, and outstanding share measurements. Companies are expected to follow GAAP rules when reporting their financial data in their financial statements. If a financial statement is not prepared using GAAP principles, investors should be very wary! That said, GAAP is only a set of guidelines, and that leaves plenty of room for interpretation by unscrupulous accountants to distort figures. Thus, even with GAAP, one should not put complete faith in the numbers companies report.

Related Terms:
• Accrual Accounting
• Balance Sheet
• Cash Flow Statement
• Income Statement
• First In, First Out—FIFO