Generally Accepted Accounting Principles (GAAP) serve what purpose?

Generally Accepted Accounting Principles (GAAP) establish a standard framework for financial accounting, which ensures consistency and comparability in financial statements across different organizations. This framework includes a set of rules, guidelines, and conventions that govern how financial transactions are recorded, reported, and disclosed. By adhering to GAAP, companies can provide stakeholders, including investors, creditors, and regulators, with accurate and meaningful financial information, facilitating better decision-making.

This standardization also promotes transparency and helps prevent fraud, as it requires companies to follow specific principles that make their financial dealings clear and understandable. Overall, the establishment of a framework for financial accounting is crucial for maintaining the integrity of financial reporting and fostering trust in the financial markets.