What does GAAP stand for in accounting?

• A. GOVERNMENTAL ACCOUNTING PRINCIPLES
• B. GENERAL ACCOUNTING PRINCIPLES
• C. GENERALLY ACCEPTED AUDIT PRINCIPLES
• D. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

Answer: (D)

GAAP stands for Generally Accepted Accounting Principles. It’s the framework of rules and conventions used to prepare, recognize, measure, present, and disclose financial information in the United States, aimed at making financial statements consistent and comparable across entities. The standards are established primarily by the Financial Accounting Standards Board, and they apply to financial reporting for most non-governmental entities and publicly traded companies; governments follow different standards set by GASB, and auditing has its own set of standards (GAAS) separate from GAAP. The wording “General” or “Audit” principles doesn’t fit GAAP, and the governmental variant would refer to government-specific standards, not GAAP.