Generally accepted accounting principles (GAAP): Standards of how companies are to measure and report financial statement information to external users.
A bank lent the company money or a shareholder (owner of company) invested money in the company. Both the bank and the owner want to know how the business did this year.
How should the company communicate financial performance information to the bank and to the shareholder?
The answer is to use some agreed upon method of communicating the information. GAAP is this agreed upon method.
Financial accounting standards board (FASB): The organization that sets and maintains GAAP. [01]
GAAP standards: called Accounting Standards Updates (ASUs).
FASB accounting standards codification (ASC): Organizes the standards by topic (ASC website; if you're interested it's free to register).
In the past, each individual country has created its own accounting standards.
This created a problem: financial statements of companies in one country were not comparable to the financial statements of companies in some other country.
In 2001, the International accounting standards board (IASB) issued a set of International financial reporting standards (IFRS). These are the international version of GAAP.
As of 2018, 120 countries had adopted these standards. The United States has not.
Some GAAP standards have been converged with IFRS (e.g., revenue recognition), but there has not been a full convergence to date.
GAAP is "rule based" while IFRS is "principle based". Said differently, GAAP most often gives very specific rules on how to record economic transactions while IFRS gives guidelines but is often vague on the exact implementation of the guidelines.