---
title: "US GAAP"
description: "What US GAAP is, how the FASB Codification is organised, who must follow it, and the main differences from IFRS, such as LIFO inventory and development costs."
canonical: https://ledgeriano.com/glossary/us-gaap
language: en
publisher: "Ledgeriano"
updated: 2026-11-06
---

# US GAAP

> What US GAAP is, how the FASB Codification is organised, who must follow it, and the main differences from IFRS, such as LIFO inventory and development costs.

US GAAP, the Generally Accepted Accounting Principles of the United States, is the accounting framework that US public companies must follow and most US private companies use. The Financial Accounting Standards Board (FASB) sets it through the Accounting Standards Codification, which organises every authoritative rule by topic number.

The Codification groups standards into topics such as ASC 330 Inventory, ASC 606 Revenue from Contracts with Customers and ASC 842 Leases. New guidance is issued as Accounting Standards Updates that amend the Codification. The SEC enforces US GAAP for listed companies.

US GAAP and IFRS have converged in revenue and leases but still differ. US GAAP allows LIFO inventory; IFRS does not. US GAAP generally expenses development costs that IFRS may capitalise, and it prohibits reversing inventory write-downs that IFRS allows.

A US GAAP chart of accounts often follows the order of a classified balance sheet and a multi-step income statement. The [US GAAP chart of accounts template](https://ledgeriano.com/templates/us-gaap-chart-of-accounts) is built that way, and Ledgeriano can create a business directly from it.

## Example: LIFO under US GAAP

A distributor buys 100 units at 10, then 100 at 12, and sells 120. Under LIFO, cost of sales is 100 × 12 + 20 × 10 = 1,400 and closing inventory is 80 × 10 = 800. Under FIFO, cost of sales is 100 × 10 + 20 × 12 = 1,240. In rising prices LIFO lowers reported profit, which is why it is popular for US tax purposes.

### Do private US companies have to use US GAAP?

Not by federal law, but lenders, investors and auditors usually require it. Private companies can use simplifications from the Private Company Council, and some use other frameworks for smaller reports.

### Can a company report under both US GAAP and IFRS?

Yes, groups with listings or parents in different jurisdictions often keep one set of books and produce a reconciliation or a second set of statements for the other framework.