GAAP: Generally Accepted Accounting Principles.

This is a set of basic rules and principles set by the Financial Accounting and Standard Board (FASB). These rules help the manager in managing accounts properly. It increases the transparency of accounts. It helps in fair representation of accounts.

Capital expenditure:

It is the expenditure incurred to acquire assets or improving the existing assets. Under capital expenditure money spend on durable items for long term use. It increases the earning capacity of the business.

Example: Installation cost, research and development expense, etc.

Amortization: