Final answer:
GAAP stands for Generally Accepted Accounting Principles, not Procedures. It is a set of principles, standards, and procedures that provide a framework for financial reporting.
Step-by-step explanation:
GAAP stands for Generally Accepted Accounting Principles and not Procedures. It is a set of accounting principles, standards, and procedures that are widely accepted and used in the United States. These principles provide a framework for financial reporting and ensure consistency, reliability, and transparency in financial statements.
Some key features of GAAP include the accrual basis of accounting, materiality, consistency, and the principle of prudence. The accrual basis requires recording income and expenses when they are earned or incurred, not when cash is received or paid. Materiality means that only significant information should be included in the financial statements, while consistency ensures that accounting methods used are applied consistently from one period to another. Lastly, the principle of prudence requires caution in recording business transactions.
It is important to note that GAAP may differ from international accounting standards. In comparison, International Financial Reporting Standards (IFRS) is a set of accounting standards used by many countries around the world. While there are similarities between GAAP and IFRS, there are also notable differences in certain areas.