For all you accountants out there, this article is for you! At some point in your life, you probably heard the phrase “accounting is the language of business”. This was said by no other than Warren Buffet and he’s right. Like other languages, accounting is all about communicating financially.
Businessmen have relationships with their shareholders and investors who are important to keep the company alive. But, like any business, if money isn’t made or if it can meet its expectations and goals, it’s off to the farm upstate.
But, with accounting, it makes sure that all info and finance are being taken care of so that the ruination of your business does not happen.
With that being said, let’s take a look into why accounting is the language of business.
It Is the Standard Means of Communication
Accounting in ways is a lot like music or art. It is a part of our daily lives and it can be understood by people all over the world. Numbers function the same.
Accounting is like learning a new language. But, with it being part of the business world, it makes it a tad bit more difficult. Business can change on the fly and there is always some new way to communicate better.
Accounting is standardized because of the practical business model that it follows. It can develop concepts even if accounting has to suffer under bureaucracy. For example, knowing what a balance sheet does not require intense training. It can be understood pretty easily.
If you have a startup and an investor is poking around. He doesn’t care what it is, he cares if it can make money. That’s why it’s important for investors to comb through your financials to make sure that it is all legit.
Accounting Has Been Around Forever
Accounting has been a form of financial logistics since we humans began to develop society. Over time, accounting had evolved to help better understand finances and social needs, not for the ones at home, but for those across the world.
All cultures and civilizations through time have worked to sustain their society and this includes language and keeping records. In fact, ancient tablets with wages inscribed into them originated around 600 BC and from Babylonia. Thus, it is proof that accounting has been an ancient form of communication for many years.
There Is a Story in Accounting
When an accounting report is sent in, it can be read similarly to a book. That is because it describes the company’s performance with their money. If you have ever been to a high-level meeting, then chances are you hear them throw around a lot of financial lingoes and make reference to their fiscal reports.
But, there is a story in all of these reports because it is to understand them for communication between others.
Languages all have certain terms, slang, and terminology that are often unique to their identity. With accounting, it is no different. People in financial positions must understand accounting lingo. This helps with understanding the context and what business deals are happening.
So if you have a fancy position in a business’s finance, then you need to get a glossary of financial terms or you are going to have a bad time.
Accounting in Other Occupations
Besides accounting, finance is an important factor in business communications. It requires research, collecting the data, and translating it into a document that is easy to understand.
Having a finance job means you also need to ask all the right questions when it comes to it. You want to make sure that you cover all your bases.
Besides accounting and finance, economics is another business language. These all sound similar, but they all handle different aspects of the usage of currency. Economics focuses on supply and demand, pricing, and predicting market trends.
It is wise to combine these factors together because it will paint a larger picture for you to understand and grasp. Because businesses can make large decisions at any time and under stressful or strange circumstances, it’s best to learn these trade languages in order to make the best choices.
Accounting — An In-Depth Business
Accounting requires the application of deep knowledge of the business field. It means ensuring that certain individuals know all records and transactions of company finances.
Besides maintaining records, one must also prepare the information that calculates transactions and other factors that can affect a business. Having a business requires the need to always be checking on the finances to know if you are going under or if you are making it big.
Accounting is very much the language of business. It has been around for centuries and every civilization understands it due to terminology and lingo.
As Warren Buffet put it best, “Accounting is a language all of its own. Getting comfortable in a foreign language takes a little experience, a little study, early on but it pays off big later on.”