Accounting Principles

If everyone involved in the process of accounting
followed their own system, or no system at all,
there's be no way to truly tell whether a company was
profitable or not. Most companies follow what are
called generally accepted accounting principles, or
GAAP, and there are huge tomes in libraries and
bookstores devoted to just this one topic. Unless a
company states otherwise, anyone reading a financial
statement can make the assumption that company has
used GAAP.

If GAAP are not the principles used for preparing
financial statements, then a business needs to make
clear which other form of accounting they're used and
are bound to avoid using titles in its financial
statements that could mislead the person examining
it.

GAAP are the gold standard for preparing financial

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