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What is gaap?

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Wiki User
2008-06-12 11:13:46

Generally Accepted Accounting Principles Generally Accepted

Accounting Principles (GAAP) is the standard framework of

guidelines for financial accounting. It includes the standards,

conventions, and rules accountants follow in recording and

summarizing transactions, and in the preparation of financial

statements. One key aspect of GAAP is an emphasis of "general" as a

conceptual realization of variables in method. Far from suggesting

that all accounting exercises employ the same method and generate

the same results, GAAP accommodates variation in applied accounting

methods as long as the methods generally adhere to this set of

principles, which are more broad than specific. Pursuant to the

foregoing, not only therefore does this provide for variation in

method, the natural conclusion is GAAP creates an environment in

which financial reporting results can vary depending on purpose.

One company in one fiscal year can produce different reports, all

completed within GAAP, for different audiences or different

purposes, and all these reports can be considered correct.

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