GAAP vs Non-GAAP

GAAP-vs-Non-GAAP

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Difference Between GAAP and Non-GAAP

GAAP stands for Generally Accepted Accounting Principles, lays down a uniform set of rules and formats, along with guidelines for measurement, presentation, disclosure and recognition where companies need to follow in its method of accounting, on the other hand, Non-GAAP is any method of accounting followed by the companies other than GAAP where non prescribed standards are followed. It is also called as adjusted earnings.

GAAP vs NON-GAAP Infographics

GAAP vs Non GAAP-info

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Key Differences GAAP vs NON-GAAP

The key differences are as follows –

Comparison of Table

CriteriaGAAPNon-GAAP
AccountingPrescribed standards and formats are followed in accounting methods by the companies.No such prescribed standards, any method of accounting can be followed by the companies.
Investors and Creditors AnalysisIt is useful to the investors in the analysis of their investments by going through financial statements, but a little difficult to understand the standard format.common users, investors, and creditors can easily understand financial statements.
StandardsThis is the industry standard.It is not an industry standard.
Business OperationsShows a clear picture of business operations from a financial point of view.Some adjustments to be made to give a clear picture of business operations.
Non-Recurring ExpensesNon-recurring expenses will be included in its financial statements.Non-recurring expenses will be excluded in its financial statements.
Window DressingThere is no scope for window dressing of profitability in financial statements.There is scope for window dressing of profitability in financial statements.
Comparison of Financial ResultsThere is a reliable comparison of financial results from Industry to industry, company to company and year to year.No reliable comparison of financial results between company to company, industry to industry and year to year.

Conclusion

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This has been a guide to the GAAP vs Non-GAAP. Here we discuss the top differences between GAAP and non-GAAP along with infographics and comparison table. You may also have a look at the following articles –

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