GAAP is the abbreviation of Generally Accepted Accounting Principles. GAAP is not necessarily a collection of rules and guidelines, though GAAP uses those. Rather, GAAP represents a collection of broad concepts and detailed practices that represent best accounting practices as it is accepted at a given time, and often within a specific industry.

Reporting according to GAAP provides a measure of uniformity so that those examining financial statements have a foundation from which to compare performance to another period or another company, or develop financial ratios that use specific GAAP-defined quantities.

Even though there is no overseeing authority, GAAP depends on a rule of four in terms of key assumptions, basic principles and basic constraints.