What does GAAP stand for in accounting?

GAAP stands for Generally Accepted Accounting Principles. This term encompasses the standard framework of guidelines for financial accounting, which includes the principles, standards, and procedures that companies must follow when compiling their financial statements. GAAP provides a consistent set of rules that ensure the transparency, reliability, and comparability of financial reporting, which is crucial for stakeholders, including investors and regulators.

The principles encompassed by GAAP include aspects such as revenue recognition, balance sheet classification, and materiality which help promote consistency across the accounting profession. By adhering to GAAP, businesses can provide accurate representations of their financial position, which aids in effective decision-making and enhances the integrity of the financial markets.

Other terms presented do not accurately capture the intention and scope of GAAP. They may refer to aspects of accounting practices or policies but do not define the comprehensive set of standards that GAAP entails.