"How and when revenue is recognized is governed by GAAP."
Being a CPA & coder this statement really annoys me, GAAP for those that don't know simply means "Generally agreed Accounting principals" and there is really no acceptable reason for this acronymn to be used outside of the (accounting) profession. Maybe it wasn't the authors intent but it smacks of those people who use jargon to help aggrandize their position when a simple inclusive explanation would have been more appropriate.
1) Whether or not people outside the accounting profession should use the acronym 'GAAP'.
2) Whether people use the term as jargon to help aggrandize their position.
I have no comment on point 2. On point 1, though, my position is the polar opposite of yours. Business people in general (and especially CEOs!) should understand the principles of accounting, the ways in which transactions are recorded etc. If they don't understand these things, how are they meant to understand their company's financial statements? If they can't understand their company's financial statements, how are they meant to manage the company?
BTW - I am also a qualified accountant, although this is not related to my current job. I feel so strongly about these issues, though, is that I periodically run an 'Intro to Accounting and Finance' course for interested colleagues, and have delivered similar training courses at other large tech companies in the past.
Actually I agree with your points, my comment was made in a rush and on reflection is full of hubris. My complaint was with the article which is attempting to define terms for newcomers not defining this term. I didn't mean non accountants shouldn't use the term, I meant that use of this term as an acronymn without definition in a definitions of things article seemed inappropriate.
GAAP is not an uncommon acronym in tech circles. For example, listen in to any earnings call or read any of the big tech companies' quarterly earnings press releases and you'll find references to GAAP all over the place. Quarterly earnings are a pretty common subject of discussion when they occur, so I wouldn't be surprised if a lot of programmers are familiar with the term.
I have to agree - I see it mentioned a lot throughout articles, tweets etc when discussing funding or earnings. I've never felt it was a particularly 'accountants only' term.
The SEC, of course, being the federal agency that regulates all attempts to take investment.
So I think the acronym's use here is important, because it signals that there is a precise legal definition of the term revenue, and that startup founders, so used to hustling and half-assing things, should not fuck around when using that word.
Sure, I really agree with you. My beef was not their use of term but the fact they didnt go on to define it in what is a let's define the things article. I suppose if they'd just unpacked the acronymn with a brief definition would have made this article more approachable in my opinion.
Yes. The term is not legislatively defined, it is a term used in industry, over the years I've heard it defined both ways as "agreed" and "accepted", but I agree that accepted seems more common now. Talks to the point of why use of undefined acronyms can lead to confusion.
Comments
Being a CPA & coder this statement really annoys me, GAAP for those that don't know simply means "Generally agreed Accounting principals" and there is really no acceptable reason for this acronymn to be used outside of the (accounting) profession. Maybe it wasn't the authors intent but it smacks of those people who use jargon to help aggrandize their position when a simple inclusive explanation would have been more appropriate.
You're talking about two different issues:
1) Whether or not people outside the accounting profession should use the acronym 'GAAP'.
2) Whether people use the term as jargon to help aggrandize their position.
I have no comment on point 2. On point 1, though, my position is the polar opposite of yours. Business people in general (and especially CEOs!) should understand the principles of accounting, the ways in which transactions are recorded etc. If they don't understand these things, how are they meant to understand their company's financial statements? If they can't understand their company's financial statements, how are they meant to manage the company?
BTW - I am also a qualified accountant, although this is not related to my current job. I feel so strongly about these issues, though, is that I periodically run an 'Intro to Accounting and Finance' course for interested colleagues, and have delivered similar training courses at other large tech companies in the past.
Actually I agree with your points, my comment was made in a rush and on reflection is full of hubris. My complaint was with the article which is attempting to define terms for newcomers not defining this term. I didn't mean non accountants shouldn't use the term, I meant that use of this term as an acronymn without definition in a definitions of things article seemed inappropriate.
GAAP is not an uncommon acronym in tech circles. For example, listen in to any earnings call or read any of the big tech companies' quarterly earnings press releases and you'll find references to GAAP all over the place. Quarterly earnings are a pretty common subject of discussion when they occur, so I wouldn't be surprised if a lot of programmers are familiar with the term.
I have to agree - I see it mentioned a lot throughout articles, tweets etc when discussing funding or earnings. I've never felt it was a particularly 'accountants only' term.
Correct me if I'm wrong here, but my understanding is that GAAP is not just stuff people generally agree on, but a highly technical set of rules:
https://en.wikipedia.org/wiki/Generally_Accepted_Accounting_...
And that they are determined in the US by the FASB, which is part of the SEC:
https://en.wikipedia.org/wiki/Financial_Accounting_Standards...
The SEC, of course, being the federal agency that regulates all attempts to take investment.
So I think the acronym's use here is important, because it signals that there is a precise legal definition of the term revenue, and that startup founders, so used to hustling and half-assing things, should not fuck around when using that word.
Sure, I really agree with you. My beef was not their use of term but the fact they didnt go on to define it in what is a let's define the things article. I suppose if they'd just unpacked the acronymn with a brief definition would have made this article more approachable in my opinion.
Yes. The term is not legislatively defined, it is a term used in industry, over the years I've heard it defined both ways as "agreed" and "accepted", but I agree that accepted seems more common now. Talks to the point of why use of undefined acronyms can lead to confusion.