Accounting as a Language of Business
Accounting is frequently called “the language of business” because of its ability to communicate financial information about an organization. Various interested parties such as managers, potential investors, creditors, and the government depend on a company’s accounting system, therefore must include accurate collecting, recording, classifying, summarizing, interpreting, and reporting of information on the financial status of an organization.
In order to achieve a standarized system, the accounting process follows accounting priciples and rules. Regardless of the type of business or the amount of money involved , common procedures for handling and presenting financial information are used. Revenues, and expenditures are carefully monitored and transactions are summarized in financial statements which reflect the major financial activities of an organization.
Two common financial statements are the balance sheet and the income statement. The balance sheet shows the financial positions of a company at one point in time, while the income statement shows the financial performance of a company over a period of time. Financial performance allow interested parties to compare one organization to another and compare accounting periods within one organization. For example , an investor may compare the most recent income statement of two corporations in order to find out which one would be a better investment.
People who specialize in the field of accounting are known as accountant. Accountant are classified as public, private, or governmental. Public accountant word independently and provide accounting services such as auditing and tax computation to companies and individuals. Public accountants may earn the title of CPA (Certified of Public Accountant) by fulfilling rigorous requirements. Private accountants work for governmental agencies or bureaus. Both private and governmental accountants are paid on a salary basis, whereas public accountants receive fees for their salaries.
Through effective application of commonly accepted accounting systems, private, public and governmental accountants provide accurate and timely financial information that is not necessary for organizational decision making.
NAME : ELSHA INDAH CECILIA
CLASS : 3 EB 03
FACULTY/MAJOR : ECONOMICS / ACCOUNTING
NPM : 20207399
SOFTSKILL TEACHER : Nuke Farida