Generally Accepted Accounting Principles

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.

One key aspect of GAAP is an emphasis of "general" as a conceptual realization of variables in method. Far from suggesting that all accounting exercises employ the same method and generate the same results, in fact GAAP accommodates variation in applied accounting methods as long as the methods generally adhere to this set of principles, which are more broad than specific.

Pursuant to the foregoing, not only therefore does GAAP provide for variation in method, the natural conclusion of this is that GAAP also creates an environment in which financial reporting results can vary depending on purpose. One company in one fiscal year can produce different reports, all completed within GAAP, for different audiences or different purposes, and all these reports can be considered correct.

Also, a company may report financial performance considered acceptable by the accounting firm that produced the review; yet upon closer investigation oddities may be revealed that require a restatement of all or part of the report. Recently (2006 - 2007) well known corporations such as Apple and Research In Motion have had to restate certain aspects of their financial reports that had previously been presented as accurate yet met with disagreement as to their adherence to certain "best practices".