Question

Why is accounting called the language of business? In what ways do you use accounting at home and/or at work?

Answer 1

ACCOUNTING

Acconting is the art of recording , classifying, summarising and itherpreting the financial and non-financial datas of an organization . It deals with the expenses, revenues, losses and gains of an organization. Accounting plays a vital role in business, because it help's in identifying the income and expenditure and also with quantitative financial informations which is helpful for managerial decision-making process .

Accounting as a language of business

Financial accounting is called as the language of business. It is the language where business uses to communicate their financial and economic informations to the external parties, such as; shareholders and creditors. Accounting is used to communicate the financial information. It is used to obtain a company's financial affairs, classify the data in a meaningful way, and summarize it in the financial reports.

The financial statements will be meaningless to the persons , who do not have the knowledge of business language called, accounting. So accounting functions like a language in business. The functions of accounting departments of any company serves as the basis for all financial business communications. Accounting language is a globally accepted one, where financial datas are served in the same manner.

Uses of accounting in business

• To know the financial position of an organization
• Ascertainment of profit/loss of the business
• Helps in the managerial decision making task.
• Knowledge of debtors and creditors
• Assessment of tax
• Creates the company budgets and budgetary controls
• Informing investment decisions
• Evaluatio of business performances
• Liquidity analysis
• Complaince of the statutory provisions

Uses of accounting in daily life

• Planning for the future
• Ascertainment of sources of income and expenses
• Budgeting and management of spending nature
• Track income and expenditure
• Provide quantitative financial information
• Saving for the future