Generally Accepted Accounting Principles (GAAP)

The Generally Accepted Accounting Principles (GAAP) is a set of guidelines that all
accountants must apply to their accounting practices. Just as a newspaper uses a style
guide that outlines a set of standards for its writers and editors, the GAAP sets a
standard that guides accountants when recording and reporting financial information.
Also, when all accountants work in accordance with the GAAP, investors and analysts
can easily understand their filings and financial statements.