What does GAAP stand for in accounting?

GAAP stands for Generally Accepted Accounting Principles. This term refers to a set of rules and standards that outline the accepted accounting practices and procedures used to compile financial statements. These principles ensure consistency, reliability, and comparability of financial information across time and among different entities, which is crucial for investors, regulators, and other stakeholders who rely on accurate financial reporting.

GAAP encompasses various guidelines and regulations that govern aspects such as revenue recognition, balance sheet classification, and materiality. Following these principles helps maintain transparency and provides a framework that companies need to follow in their financial accounting and reporting.

The other suggestions do not accurately define GAAP; they either mischaracterize its function or mix terms that are not widely recognized in the field of accounting.