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August 31, 2009

What is GAAP?

GAAP is the acronym for generally accepted accounting principles. In the U.S. that means

1) the basic accounting principles and guidelines such as the cost principle, matching principle, full disclosure, etc.,

2) the detailed standards and other rules issued by the Financial Accounting Standards Board (FASB) and its predecessor the Accounting Principles Board, and

3) generally accepted industry practices.

GAAP must be adhered to when a company distributes its financial statements outside of the company. If a corporation’s stock is publicly traded, the financial statements must also adhere to rules established by the U.S. Securities and Exchange Commission (SEC). This includes having its financial statements audited by an independent CPA firm.

Learn more about basic Accounting Principles.

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Comments

12 Responses to “What is GAAP?”

  1. KJ Rodgers on September 1st, 2009 1:54 pm

    GAAP has been a standing practice for a while now, but I have recently read about the possibility of bank regulators moving away from GAAP and the damages that can do to to other industries. Whats you take on that?
    http://www.vbpoutsourcing.com

  2. AJD on September 3rd, 2009 3:54 am

    It also exists the French GAAP. There are a lot differences between French GAAP and US GAAP?

  3. jagan on September 3rd, 2009 4:27 am

    hai i am account student in thought Balance submit and detail again accounting payment vochers and journal.

    thank you

    you loveble student
    jagan

  4. Sylvia on September 10th, 2009 9:50 am

    I am a third year accounting student, and we are getting into the topic of IFRS(International Financial Reporting Standards). I was wondering if the site will be posting an area for this subject?

  5. IRSHAD on September 12th, 2009 4:17 am

    me in second year accounting course and I need information about double decline method

  6. ACoach on September 12th, 2009 7:13 am

    Under the Q&A tab on AccountingCoach.com is a search box in which you can enter: double declining balance depreciation. The search result will be several questions and answers explaining this method of depreciation.

  7. ali on September 13th, 2009 8:38 am

    Hi! thanks for u a generosity in sharing your knowlege,skills and expertisee? pliz enlightening me on public accounting? currently am student cpa kenya part three

  8. elpidio on September 14th, 2009 10:39 pm

    please post topics regarding IFRS

  9. imran on September 19th, 2009 2:52 am

    what is the use of accounting principles in small scale industries

  10. suresh on September 26th, 2009 6:20 am

    Hello Sir,Please can you explain me about Going Concern, What is the effect on income statement and Financial Statement. Thanks

  11. June on October 23rd, 2009 3:44 am

    Interest in the topics regarding IFRS

    Thanks!

  12. mustafe xaashi on November 9th, 2009 1:12 am

    I am acountant teacher IAm stying somalia speacilly puntland so I want to help me for any accountant side

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