What is GAAP?
The accounting profession relies on generally accepted accounting principles, or GAAP, to regulate the standards of accounting in the U.S. The Financial Accounting Standards Board (FASB) publishes the "most authoritative source" on GAAP principles.
GAAP is used by organizations to: organize transactions into accounting records and translate the accounting records into financial statements. GAAP may also require supporting information such as notes and schedules.
One of the reasons for using GAAP is so that anyone reading the financial statements of multiple companies has a reasonable basis for comparison since all companies using GAAP have created their financial statements using the same set of rules.