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What is Generally Accepted Accounting Principles (GAAP)?
Generally Accepted Accounting Principles (GAAP) are a standardized set of accounting rules, procedures, and guidelines used in the United States to ensure financial statements are consistent, transparent, and comparable. These standards are established by the Financial Accounting Standards Board (FASB) to govern how companies record revenue, expenses, and assets. In the context of modern technology, GAAP provides the framework for how businesses must account for investments in AI software, data acquisition, and digital infrastructure.
Why this matters to you
For working professionals, GAAP ensures that a company's financial health is reported accurately, which is critical for investor trust and regulatory compliance. As companies increasingly invest in AI, understanding how these costs—such as model training or software development—are treated under GAAP is essential for accurate budgeting, financial planning, and audit readiness.
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