generally accepted accounting principles

Definition

The rulebook for financial reporting in the US, commonly abbreviated as GAAP. It's the reason accountants can't just make up whatever numbers feel right, though creative interpretation remains an art form.

Example Usage

The auditors questioned whether the revenue recognition complied with GAAP, or just with management's wishful thinking.

Origin

Developed gradually from the 1930s onwards, formalized after the 1929 crash proved that unregulated accounting led to financial disaster.

Fun Fact

Most of the world uses IFRS instead of GAAP, leading to endless debates about which is better—the accounting equivalent of metric vs. imperial.

Source: US financial reporting standards

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