Systematic development and analysis of information about the economic affairs of an organization. The actual recording and summarizing of financial transactions is known as bookkeeping. When the data thus produced are abstracted in reports (usually quarterly or annually) for the use of persons outside the organization, the process is called financial accounting.
Three reports are typically generated in financial accounting: the balance sheet, which summarizes the firm's assets and liabilities; the income statement, which reports the firm's gross proceeds, expenses, and profit or loss; and the statement of cash flow, which analyzes the flow of cash into and out of the firm. The creation of reports (usually monthly) for internal planning and decision-making is called managerial accounting. Its aim is to provide managers with reliable information on the costs of operations and on standards with which those costs can be compared, to assist them in budgeting.
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