By the definition of language, we can ask a question that is ....
What are Human focusing by the word or words are pronounced by themselves?
The answer maybe "to narrates emotions and conditions of mind". Right?
By the above discussion, we can ask that "what are accounting focusing for a business?
To get the answer, we need to focus on the functions of accounting. The answer of that question can as like as...
- 1. Why does A transaction happened?
- 2. What is the result of it?
- 3. By this transaction, what effect has been on the organization.
- 4. By preparing final account, what can be known.
- 5. By analyzing balance sheet, A businessman can illustrated the real situation of his business.
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| Accounting is the language of business. |
Accounting make balance sheet at the end of accounting period by using ledger accounts. Before making balance sheet it organizes all the ledger entries into trial balance so that the mathematical purity can be justified.
However, From the balance sheet we can know that.....
| Firstly | amount of liability and assets of business. |
| Secondly | Measurement of business risk. |
| Thirdly | Ability of paying liability from assets. |
| Fourthly | Ensuring all parties benefits. |
| Fifthly | Measurement of retained earning profit. |
From the above discussion, it has been proven that by accounting, a businessman can know the real condition of his business. Shareholders and other related parties of business can get the actual scenario of business. For this reason, accounting is called as the language of business.
