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This question is about what an accountant does.
GAAP vs. non-GAAP
GAAP and non-GAAP are terms used in finance and accounting, the difference between GAAP and non-GAAP is that GAAP refers to Generally Accepted Accounting Principles which are a set of standards and guidelines used in accounting, while non-GAAP refers to financial and accounting practices, not in accordance with GAAP.
GAAP stands for Generally Accepted Accounting Principles, these guidelines and standards are meant to direct the way accountants record and report financial information. GAAP is used to make sure that all financial documents and statements prepared by an accountant are accurate and transparent.
GAAP seeks to provide a fair and correct reflection of a company's financial performance and overall financial health.
Non-GAAP refers to methods and practices that do not align with Generally Accepted Accounting Principles (GAAP). These include metrics and measures like adjusted earnings, adjusted earnings per share, and other metrics like ones that leave out certain items, such as one-time charges or special items.
Non-GAAP methods are used by companies that feel GAAP methods do not give an accurate appraisal of the companies' financial situations, including their profits and overall financial health.
Key Takeaways:
| GAAP | Non-GAAP |
|---|---|
| GAAP refers to Generally Accepted Accounting Principles which are a set of standards and guidelines used in accounting. | Non-GAAP refers to financial and accounting practices, not in accordance with GAAP. |
| GAAP guidelines and standards are meant to direct the way accountants record and report financial information. | Non-GAAP includes metrics and measures like adjusted earnings, adjusted earnings per share, and other metrics like ones that leave out certain items, such as one-time charges or special items. |
| GAAP is used to make sure that all financial documents and statements prepared by an accountant are accurate and transparent. | Non-GAAP methods are used by companies that feel GAAP methods do not give an accurate appraisal of the companies' financial situations, including their profits and overall financial health. |
| GAAP seeks to provide a fair and correct reflection of a company's financial performance and overall financial health. | Non-GAAP methods seek to bolster a company's financial status through methods that are not included in GAAP. |
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