generally accepted accounting principles gaap are

Publicly traded companies in the United States are required to submit financial information to a non-affiliated certified public accounting (CPA) firm to remain on the stock exchange. Using GAAP, accountants are then able to report the financial performance of a company over a period of time, typically a fiscal year. Some aspects it covers are: procedures on income, expenditures, financial statement presentation, liabilities and assets, and foreign currency. GAAP is a set of principles, standards, and procedures that are applied through the use of an accrual accounting process by an AP department. Knowing what GAAP is and why it is beneficial to your company as a reporting option will make a difference for company growth, investor speculation, and auditor review. As a result of the Securities Exchange Act of 1934, the General Accepted Accounting Principles (GAAP) became a set of principles and regulations established to standardize how companies reported on their finances. Among legislation and regulatory boards created to combat the Great Depression, the need for standardized methods of reporting financial data was identified.

With the stock market crash of 1929, questions on the ethics and accuracy of financial reporting made by publicly traded companies arose.

Generally accepted accounting principles gaap are