Accounting as the language of business.

A business (also known as enterprise or firm) is an organization involved in

the trade of goods, services, or both to consumers.
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Businesses are predominant in capitalist economies,
where most of them are privately owned and administered to provide service to customers for profit.
Businesses may also be not-for-profit or state-owned. Accounting is the systematic recording, reporting,
and analysis of financial transactions of a business. Both business and accounting are closely related as
they rely on each other to proceed. It is often mentioned that accounting as the language of business.

Accounting is called the language of the business in the sense that the responsibility of learning
accounting is very similar to the task of erudition a new language ,it is complicated by the fact that heaps
words used in accounting mean almost the same but not fairly the same thing as the identical words
scrounging in everyday non -accounting usage. For an example, accrued assets are those assets from
which the revenues are earned but not received, dead assets are those assets whose life is restricted to
their immediate use and salvage value is the scrap value realized on the sale of a fully depreciated asset or
a asset which cannot be used for production.

Accounting is often referred to as the language of business because it also is how your business
speaks to you. The books will tell you the trends in your business, what is making you stay in the red, or
what methods are keeping you in the black. Financial statement that are done by accountants which
include the income statement, balance sheet, statement of shareholders' equity, statement of cash flows,
and footnotes are presented to shareholders, the public, and the SEC in a company's quarterly and annual
reports. Using these, an analyst can determine the health of a company, its likely prospects going forward,
and whether or not an investment in the shares or debt of the company would likely be profitable.
Decisions are made based these accounting data.- Money is the important aspect of business, and
accounting is the management of that money. It's the money that speaks loudest.

Without accounting, business would be kayos. There would not be any indicators of how well a
business was doing other than the cash on hand at that given time; however, that information would be
short sighted. The financial statement provides the accounting data that is used to produce financial
statements. The financial statements tell the story of how well the business is doing in terms of profit or
loss. The financial data can be analyzed to determine the status of the company's ability to pay its short-
and long-term debt. The information can be analyzed to determine the company's liquidity, solvency and
debt levels. These indicators are critical in determining the business's ability to continue operations into
the future. Accounting data can be used to determine whether a company is making efficient use of its
resources. The data can be analyzed and manipulated to determine whether a company should make or
buy parts or raw materials. It can be used to evaluate whether a company is on budget. Variance analysis
can determine if your labor hours, cash, raw material consumption or clock hours are over or under
budgeted levels. This allows a management team to alter the input in order to achieve satisfactory results.

Accounting is the language of business because it tallies the results in terms of owner's equity.
The owner's equity is the amount of business that is owned free of liability. This is important for
determining individual worth. The liabilities are subtracted from the assets, and the difference is the
owner's equity.