What is gaap?
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.