GAAP Hierarchy

The GAAP (Generally Accepted Accounting Principles) Hierarchy is a ranking system that guides how companies choose accounting rules. At the top are authoritative sources like official standards from standard-setting bodies (e.g., FASB). If specific guidance isn't available, companies look to more general sources such as industry practices or their own previous reports. This hierarchy ensures consistency and reliability in financial statements by prioritizing the most credible and specific guidance first, then moving to broader or less authoritative sources when needed.