GAAP — Generally Accepted Accounting Principles
Definition: The standard framework U.S. companies must use when preparing financial statements. GAAP rules make filings comparable across companies and quarters.
Example
When a startup reports "non-GAAP" earnings that look great and GAAP earnings that look terrible, the gap is usually stock-based compensation.
When you'll hear it
GAAP shows up most often in board meetings, quarterly business reviews, and strategy off-sites. When someone uses it, they're usually referring to generally accepted accounting principles — and they expect the room to already know what that means.
FAQs
What does GAAP stand for?
GAAP stands for Generally Accepted Accounting Principles.
What does GAAP mean in business and finance?
The standard framework U.S. companies must use when preparing financial statements. GAAP rules make filings comparable across companies and quarters.
Where will I hear GAAP used at work?
GAAP comes up most often in board meetings, quarterly business reviews, and strategy off-sites. It's used as shorthand for generally accepted accounting principles, so people assume you already know the term.