Generally Accepted Accounting Principles of USA (US GAAP)

Definition

Generally Accepted Accounting Principles (GAAP) are a set of accounting principles, rules, standards, and guidelines used for preparing and presenting financial statements. These principles ensure that financial information is prepared in a consistent, reliable, and comparable manner.

GAAP is the default accounting framework followed by companies based in the United States (U.S.).

Financial Accounting Standards Board (FASB)

The Financial Accounting Standards Board (FASB) is responsible for publishing, maintaining, and updating U.S. GAAP.

FASB issues the Accounting Standards Codification (ASC), which contains the authoritative accounting rules and standards that non-governmental organizations must follow while preparing their financial statements.

GAAP for Government Agencies and SEC Registrants

For government agencies and organizations registered with the Securities and Exchange Commission (SEC), the applicable GAAP requirements are derived from:

  • Federal securities laws.
  • Rules, regulations, and directions issued by the Securities and Exchange Commission (SEC).

These rules ensure that financial reporting is transparent, accurate, and consistent.

GAAP and XBRL

Since 2008, the Financial Accounting Standards Board (FASB) has published U.S. GAAP in Extensible Business Reporting Language (XBRL).

XBRL is used for the electronic reporting and exchange of financial information, making financial data easier to prepare, share, analyze, and compare.

Key Points

  • GAAP stands for Generally Accepted Accounting Principles.
  • GAAP is the standard accounting framework followed by companies in the United States.
  • FASB is responsible for issuing, maintaining, and updating U.S. GAAP.
  • The Accounting Standards Codification (ASC) contains the authoritative accounting standards for non-governmental organizations.
  • GAAP requirements for government agencies and SEC registrants are based on federal securities laws and SEC regulations.
  • Since 2008, U.S. GAAP has been published in XBRL format.

Exam Points

  • GAAP = Generally Accepted Accounting Principles.
  • Country: United States (U.S.).
  • Issued and maintained by: Financial Accounting Standards Board (FASB).
  • Authoritative source: Accounting Standards Codification (ASC).
  • Government agencies and SEC registrants: Follow federal securities laws and SEC directions.
  • Since 2008: U.S. GAAP has been published in XBRL (Extensible Business Reporting Language).