GAAP requires the use of cash-basis accounting.

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GAAP (Generally Accepted Accounting Principles) is a set of accounting standards used by companies to prepare and present their financial statements. GAAP requires the use of accrual-basis accounting, which records revenues and expenses when they are earned or incurred, regardless of when the cash is actually received or paid. Cash-basis accounting, on the other hand, records revenues and expenses only when the cash is received or paid, which can result in distorted financial statements that do not accurately reflect a company's financial position or performance.

GAAP Requires the Use of Cash-Basis Accounting