Generally Accepted Accounting Principles

Generally Accepted Accounting Principles (GAAP) are the rules and practices under which financial statements are prepared. There is no single resource for Generally Accepted Accounting Principles. Generally Accepted Accounting Principles comprise an enormous set of documents and procedures developed over many years from numerous sources. Generally Accepted Accounting Principles include pronouncements of the Financial Accounting Standards Board (FASB), the current accounting rule-making body, and opinions of its predecessor, the Accounting Principles Board. Generally Accepted Accounting Principles include certain publications of the American Institute of Certified Accountants (AICPA) and rules of the Securities and Exchange Commission (SEC). Generally Accepted Accounting Principles also encompass the accounting practices of individual industries.

Generally Accepted Accounting Principles in the U.S. tend to be more specific and rule-laden than those overseas. Nevertheless, accountants enjoy much leeway in applying Generally Accepted Accounting Principles to accounting problems. Some argue the complexity of financial statements is due to the complexity of Generally Accepted Accounting Principles. But others say the intricacies of Generally Accepted Accounting Principles reflect the difficulty of applying standard accounting rules to the wide-ranging U.S. economy.

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