Business Tip of the Week: What are Generally Accepted Accounting Principles (GAAP)? 

Generally accepted accounting principles (GAAP) are a common set of accounting principles, standards and procedures that companies must follow when they compile their financial statements. GAAP is a combination of authoritative standards (set by policy boards) and the commonly accepted ways of recording and reporting accounting information. GAAP improves the clarity of the communication of financial information.
GAAP must be followed when a company distributes its financial statements outside of the company.