Accounting to be described as a business language. argue the above statement.

Accounting to be described as a business language.

argue the above statement.

Expert Solution

Accounting is often called the language of business because it is a means of communicating a company’s financial results.
There are two broad groups of individuals that use this financial information to make important decisions: internal and external users.
Internal users are those individuals inside the organization who use accounting information in all aspects of running a business. Examples of internal users include managers, supervisors, and directors. As an internal user, management will use accounting information to plan, organize, and control her company. For example, she may use the information to decide whether to eliminate a product line or expan a product line , cut costs , introduce a new product etc.it can be used a guideline to make good business decisions
External users are those individuals outside the organization who use accounting information to make decisions based on the company’s performance. Examples include investors, creditors, and regulatory agencies.
these are needed for example by present creditors to be assured that there money is safe and recovery can be easily done , this ensures goodwill in market as well as a trust or for a new bank or financial institution giving out loan
who rely on financial statements to give out loans or for a investor to make new investment for the comapny ,for governement so take good policy decisions for the whole industry as well as accurate and timely payment of taxes
Regardless of the type of user, accounting information must possess four key characteristics in order to be beneficial to the decision-making process:

1)relevance-information shall be such that it can be relied upon for making decision so timeliness also plays it part that information is availbale when needed
2)reliability:information is supported by facts and should be prepared in a true and fair manner
3)comparability:should be inter and intra firm comaprable
4)consistency:accoutning policies are used with consistency so as to allow users to comapre a comapny's information form year to year

Note:you can expand further if you like

ekkarill92 answered 2 years ago

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