Generally Accepted Accounting Practice (GAAP)

Generally Accepted Accounting Practice (GAAP) refers to the set of standard rules, conventions, and guidelines that accountants follow when preparing financial statements. These practices ensure consistency, transparency, and comparability of financial information across different organizations. GAAP covers areas such as how revenues and expenses are recognized, how assets and liabilities are measured, and how financial statements are structured. By adhering to GAAP, companies provide reliable financial reports that stakeholders—like investors, regulators, and lenders—can trust to make informed decisions.