Accounting is an art of recording, classifying, summarizing, interpreting and reporting of economic activities. The purpose of accounting is to accumulate and report on financial information about the performance, financial position, and cash flows of a business. This information is then used to reach decisions about how to manage the business, or invest in it, or lend money to it. This information is accumulated in accounting records with accounting transactions, which are recorded either through such standardized business transactions as customer invoicing or supplier invoices, or through more specialized transactions, known as journal entries. Once this financial information has been stored in the accounting records, it is usually compiled into financial statements, which include the following documents:
- Income statement
- Balance sheet
- Statement of cash flows
- Statement of retained earnings
- Disclosures that accompany the financial statements
At MMCA, We assemble financial statements under certain sets of rules, known as accounting frameworks, of which the best known are Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS). The results shown in financial statements can vary somewhat, depending on the framework used. The framework that a business uses depends upon which one the recipient of the financial statements wants. Thus, a European investor might want to see financial statements based on IFRS, while an American investor might want to see statements that comply with GAAP.
