What does GAAP Stand for?  

GAAP Stands for ''Generally Accepted Accounting Principles''.

Before we understand the GAAP first we know what are accounting principles

What are accounting Principles?

Accounting Principles are the set of ''concepts, Conventions, rules & procedures'' that guides the process of accounting in achieving organizational objectives.

GAAP-Generally Accepted Accounting Principles

What are Accountings Concepts?

accounting concepts mean a basic idea about something. in accounting some concepts are

 Going concern concept: that states business always runs for foreseeable future.

business entity concept: it states that a business is a separate body from its owner.

What does GAAP mean?

GAAP  means ''Generally Accepted Accounting Principles. these are the Principles that are accepted worldwide in every country. Whenever you go & work these principles are accepted and followed.

Why do we use GAAP?

Every Financial Institution follows Generally Accepted Accounting Principles to increase Globalization & harmonization. If someone in the USA (united states of America) & wants to Invest in Pakistan. Before investment, he sees the financial statements of the company held in Pakistan.

If the accounting principles that are followed in Pakistan are totally different from USA Company then it impossible for that person to read and judge the correct financial position of Pakistani company. 

That is why we use GAAP it applies to every country and if all the companies use these same principles of accounting then it can be easily understood the financial information whether you are in Pakistan or USA.

 What are the Benefits of GAAP? 

  •  Generally Accepted Accounting Principles increase harmonization & globalization. 
  •  with the help of (GAAP), Businesses are not only restricted to one border or country.
  •  It enhances the uniformity of accounting principles. 

  •  GAAP enhance cross-border business connection like national & multinational companies. 
  •  It is just because of GAAP we understand the financial statements of every country.
  •  Gaap helps to interpret & understandability of accounting information worldwide