What is meant by generally accepted accounting principles?

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What does generally accepted accounting principles effectively means for a company and why is this framework so widely used by companies?

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score 0 · Answer 1 · 2012-12-02T18:27:28+00:00

Generally Accepted Accounting Principles or GAAP is essentially an accounting framework or a set of rules and principles which are widely used for the preparation of the financial statements by companies.

GAAP has well established standards that are being used for quite a long time now and can offer reliable reporting and robust comparability.