US Generally Accepted Accounting Principles (US GAAP) are the overall conventions, rules and procedures that define accepted accounting and financial reporting practice to be followed by publicly traded companies in the United States. They are largely set by the Financial Accounting Standards Board (FASB), a private organization of accounting professionals, and the Securities and Exchange Commission (SEC), a US government agency. The FASB Accounting Standards Codification (ASC) is the source of the US generally accepted accounting principles developed by the FASB that apply to nongovernmental entities.
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Most of the generally accepted accounting principles in the United States were developed after the stock market crash of 1929, in order to have financial reporting serve the needs of investors, lenders, and other interested parties. US federal securities laws require publicly traded companies to follow GAAP to ensure that the financial information they report is reliable and consistent in form with the financial reports of all other publicly traded companies. Although all publicly traded companies are required to follow these common standards and requirements, such matters as the statements’ names, the accounts within the statements and the manner in which the numbers are calculated are left to the companies’ discretion.