GAAP stands for Generally Accepted Accounting Principles. It is the standard framework used for financial reporting in the United States.
Why GAAP matters:
- improves consistency across companies
- supports comparability over time
- gives investors a common reporting baseline
Common ideas behind GAAP:
- consistency
- materiality
- prudence
- periodic reporting
- accrual-based recognition
GAAP numbers are the standard reported numbers. Non-GAAP measures are adjusted metrics that companies may present in addition to GAAP, but they need interpretation and reconciliation.