The GAAP hierarchy is a four-level structure for choosing the principles that accountants should use when preparing the financial statements of non-government organizations.
Since several organizations regulate parts of the world of accounting, it has become necessary to determine the most appropriate standards for various accounting topics.
The GAAP hierarchy determines which standards and best practices are the most authoritative for a particular case or issue.
If information on a topic is not provided at higher levels, the accountant should apply to the next level for appropriate statements.