What do you understand by GAAP?

GAAP is an acronym that stands for Generally Accepted Accounting Principles (GAAP). It is issued by the Institute of Chartered Accountants of India (ICAI) and the Companies Act’s provisions, 1956. It is a cluster of accounting standards and common industry usage, and organizations use it for the following reasons:

  • To record their financial information properly.
  • To summarize accounting records into financial statements.
  • To disclose information whenever required.