Definition · accounting standards
GAAP
GAAP is the common set of US accounting standards, codified by the FASB, that public companies report under. For GAAP, the important details are the accounting period, source evidence, reviewer, materiality threshold, and control purpose that make the treatment auditable during close, reporting, and later review.
Also known as US GAAP, generally accepted accounting principles
Why it matters
Understanding GAAP matters because close, reconciliation, and audit work depend on consistent timing, source evidence, review thresholds, and ownership. A loose definition creates avoidable rework. When the term is tied to a source system, owner, and review cadence, it becomes easier to audit assumptions, catch changes early, and keep operators aligned.
In practice
Close example
Teams use GAAP during close, review, or audit support when a balance or transaction needs evidence. The controller should be able to trace the number to source records, timing, reviewer, and control threshold.
Review example
GAAP should be reviewed whenever the source system, calculation logic, time period, or decision owner changes. That keeps the definition useful instead of letting it drift into a label.
In practice, teams should define GAAP with a clear source, owner, time period, and decision before they use it in reporting, planning, or operating reviews.
Understanding GAAP matters because close, reconciliation, and audit work depend on consistent timing, source evidence, review thresholds, and ownership. A loose definition creates avoidable rework. When the term is tied to a source system, owner, and review cadence, it becomes easier to audit assumptions, catch changes early, and keep operators aligned.
A strong workflow for GAAP separates the definition from the action: first agree what the term means, then decide how it is measured, when it changes, and who is accountable for the next step.
FAQ
What is GAAP?
GAAP is the common set of US accounting standards, codified by the FASB, that public companies report under. For GAAP, the important details are the accounting period, source evidence, reviewer, materiality threshold, and control purpose that make the treatment auditable during close, reporting, and later review.
Who sets GAAP standards?
Teams use GAAP when they agree on the source data, time period, owner, and decision it supports. Here, it covers the common set of US accounting standards, codified by the FASB, that public companies report under, so the term should be reviewed before it is used in reporting, planning, or operating decisions.
Sources
- What Is GAAP? Definition & Principles Emporia State University https://online.emporia.edu › accounting › define-gaaponline.emporia.edu
- Understanding GAAP in Accounting devry.edu https://www.devry.edu › Blogdevry.edu
- Generally Accepted Accounting Principles (GAAP) Investopedia https://www.investopedia.com › terms › gaapinvestopedia.com
- What is GAAP? Financial Accounting Foundation https://accountingfoundation.org › about-gaap › what-i...accountingfoundation.org