It's no wonder that accounting is often referred to as the language of business, as the financial records and accounting reports tell the story of how a company is doing financially. Warren Buffet, American business magnate, investor, the chairman and CEO of Berkshire Hathaway coined the phrase "accounting is the language of business" as he gave advice to a 17-year-old investment intern during a CNBC interview and phone call. Buffet counselled the young man to study accounting language because it was the best way to learn how to read financial statements. As with any foreign language, Buffet suggested it takes time to get all the basics down and integrated into one's understanding and usage but is ultimately the main factor toward success in the business world.
Accounting a tricky but useful language to learn
Accounting is a means of communicating information about a business. It’s important to start with a solid understanding of the accounting system, how it works, and how the financial statements all fit together. Within any business, the accounting language is critical to understand, yet far too few people properly understand it. Like any language, accounting has its own set of terminology. Even if there are so many automated accounting software to do accounting but those in key financial positions within a business must learn accounting language and, specifically, learn the meaning behind unique terms to properly and effectively read them on a daily basis.
Accounting language within the business
Accounting is the study and interpretation of bookkeeping records. It not only includes maintenance of accounting records but also the preparation of financial information about economic entities within the organizations which involves the measurement of transactions and other events related to a business. The input of the routine business transactions into a company's books and it is followed by the reports with important financial information that assists executives in their decision making. Businesses need to keep track of their overall financial position, including tracking revenues, expenses, capital, and other items and the rules-based system of accounting allows companies to track these things for it.
It is common around the globe
Numbers work the same way anywhere in the world, and the understanding of a company's bottom line on a balance sheet does not need interpretation across borders. Financial reports can give a fair idea about the financial aspects of any deal when global mergers or business deals take place. This is true for any business deal, even across industries locally or with individuals seeking to invest in a new business opportunity.
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