Question

Why is accounting called the language of business? 250 words explaination	0	0

Answer 1

Why is accounting called the language of business?
Accounting is the process of summarizing, analyzing and reporting financial transactions.In accounting, financial transactions are recorded in books of accounts and reported and communicated through three major financial statements the income statement, the balance sheet, and the cash flow statement.The users of accounting information are internal users and external users, Internal users are usually company managers who use accounting information to decide how to plan and control operations on a daily and long-term basis and External users are existing or potential investors, creditors, analysts, financial advisers, regulatory authorities, unions, and the general public.Accounting furnishes all information about past events, current activities and future possibilities of a business.For reading and understanding the financial statements one should have sound command over accounting language without the knowledge of accounting, financial statements are meaningless .It is absolutely necessary for a person doing business should be financial literate otherwise business would be kayos. The person who is doing business will not have any idea how is business doing whether business is in loss or profit if he doesn't know accounting .The language is way of expressing our thoughts similarly in accounting , the results of the activities are expressed with the help of financial statements.There are certain rules that we need to follow when we write something in any language similarly accounting also has certain rules that need to be followed when communicating financial information to internal and external users. With the advancement and complexity of business accounting language is changing gradually. So, Accounting is called the language of Business.