In this article, we will discuss whether Accounting is the Language of Business.
The primary objective of accounting is to provide information that is useful for decision making purposes. From the very beginning we know that accounting is not an end but rather it is a means to an end. The financial product of accounting information is the decision taken on the basis of the information, whether the decision is meant for owners, management, creditors etc.
Accounting is often referred to as the language of business. Cost prices, sales value, profit/loss, return on investment are all accounting measurement. Investors, creditors, managers and others who have a financial interest in an enterprise, need a clear understanding of accounting terms and concept if they are to understand and communicate about the enterprise.
Accounting from a user’s perspective:
Generally, people think that being a highly technical field, accounting is practiced only by professional accountants. In reality nearly everyone uses accounting information daily. It is the means by which we measure and communicate economic events. Whether we manage a business, make investments etc. We are working with accounting concepts and information. The primary goal is to develop the ability to understand and use accounting information in making economic decisions. To do this, we need to understand the following:
1. The nature of economic activities that accounting information describes.
2. Assumptions and measurement techniques involved in developing accounting information.
3. The information that is most relevant for making most types of decision.
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