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Accounting
GAAP
Generally Accepted Accounting Principles — the standard rules and guidelines for preparing financial statements.
GAAP (or IFRS in many countries) ensures consistency and transparency. It is updated regularly to reflect new business practices. Following GAAP gives credibility to the financial statements.
It's the official rulebook that all accountants must follow so everyone reads the numbers the same way.
Real world: UK companies follow UK GAAP or IFRS. The rules say exactly how to record revenue, value inventory, and treat leases so investors can compare different companies fairly.
💡 GAAP is what makes financial statements trustworthy and comparable.