Full Form of GAAP:
Generally Accepted Accounting Principles
GAAP Full Form is Generally Accepted Accounting Principles. GAAP refers to a set of standard set of regulations that determine the widely accepted framework for financial accounting purposes. This framework is acknowledged and accepted by almost all financial organizations involved in practicing standard accounting parameters. The principles in GAAP directs an individual or an organization to make use of these standards while preparing financial statements on the basis of recording financial activities and summarizing them by using directed guidelines.
It is evident that companies tend to use GAAP to ensure transparency and perfection in their financial assessment. The standard parameters of GAAP are scientifically proven results of extensive researches. The policy boards of various organizations determine and implement such standards. Investors have a minimal consistency over the financial activities of an organization if that particular organization uses and implies GAAP. Immense consistency in financial statements is not a usual trait of GAAP.
This unique system is involved in the measurement of the outstanding shares, classification of items included in balance sheets, and recognition of revenue collection and its profit. IFRS (International Financing Reporting Standards) use GAAP in almost all of their activities related to finance. But many countries use local financial standards so that the financial statement does not have any sort of distortion. However, it is critically acclaimed that GAAP is the advanced and by far a perfect way of producing financial statements.
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