Meaning Of Generally Accepted Accounting Principles(GAAP)

Meaning Of GAAP:

In one of my earlier articles, I mentioned FRS, IFRS, IAS, etc. So what really is the difference between those mentioned and GAAP?

Simply, Generally Accepted Accounting Principles (GAAP) is the standard framework of guidelines for financial accounting. It includes the standards, conventions, and rules accountants follow in recording and summarizing transactions, and in the preparation of financial statements.

GAAP is derived, in order of importance, from:

  • issuances from an authoritative body designated by the Certified Accountants Council
  • other CPA issuances
  • industry practice; and
  • accounting literature in the form of books and articles.

Hence, there should not be any surprise that every country has its own version of GAAP with standards set by a national governing body. ( in the case of Malaysia, the GAAP is the FRS and the govening board is MASB).

Similarly being applied to the international arena, International GAAP are in the form of International Financial Reporting Standard (IFRS) which are established by International Accounting Standards.

For ease of reference, I have also attached many local and international Accounting Boards into this blog. You can click into Accounting Bodies for more information on each country’s GAAP/FRS.

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