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The Generally Accepted Accounting Principles (GAAP) is a framework of accounting standards, rules, and procedures defined by the professional accounting industry and used by publicly traded companies.
GAAP helps ensure consistency and transparency in companies' financial statements, making it easier for investors, creditors, and others to understand and compare financial information across companies. While GAAP is mandatory for publicly traded companies in the U.S., privately held companies also often follow GAAP to enhance their credibility with potential investors and lenders.
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