ZALIS GLOSSARY: generally-accepted-accounting-principles-gaap
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
The common set of accounting principles, standards and procedures that companies use to compile their financial statements. GAAP is a combination of authoritative standards (set by policy boards) and simply the accepted ways of doing accounting.
Notes:
These are the rules that companies are expected to follow. If a financial statement is not prepared using GAAP principles, be very wary!
That said, keep in mind that GAAP is only a set of standards. There is plenty of room within GAAP for unscrupulous accountants to distort figures. So even when a company uses GAAP, you still need to scrutinize its financial statements