what is gaap in accounting

Generally Accepted Accounting Principles (GAAP) is a set of accounting standards that encompass the details, complexities, and legalities of business and corporate accounting. GAAP is the accounting standard adopted by the U.S. Securities and Exchange Commission (SEC) and is the default accounting standard used by companies based in the United States). The Financial Accounting Standards Board (FASB) publishes and maintains the Accounting Standards Codification (ASC), which is the single source of authoritative nongovernmental U.S. GAAP). GAAP aims to improve the clarity, consistency, and comparability of the communication of financial information. U.S. law requires businesses releasing financial statements to the public and companies publicly traded on stock exchanges and indices to follow GAAP guidelines. GAAP incorporates ten concepts, including the principle of regularity, consistency, and materiality. Following GAAP ensures financial information is consistently and accurately reported, and it is an accounting practice required by for-profit, not-for-profit, and government entities.