Generally Accepted Accounting Principles (GAAP) are a set of rules, guidelines and procedures for reliable financial reporting. These principles provide a framework for companies to report their financials in a uniform manner, which allows investors, lenders and other stakeholders to compare the financials of various businesses to evaluate performance or predict future growth. GAAP requires organizations to adhere to certain formatting practices when presenting financial statements and requires financial statements to be prepared using historical cost accounting, matching principles and conservatism. Following these GAAP reporting requirements ensures that financial statements present an accurate reflection of the company’s true financial position at any given time.