ACCOUNTING – THE ENCHANTING "LANGUAGE OF BUSINESS"


Author:
M. Subramanian
Faculty
Institute for Technology & Management
Chennai-28
E-mail:
financesubbuu@rediffmail.com / smart_subbu@indiatimes.com

Co-author:
Dr. Venkatachalam
Reader
PG Commerce Department, SVN College
Madurai-19
 

(Note: This article aims at giving a brief introduction to the field of accounting
 – mainly focused on "Accounting for Non-Accounting" executives)


Introduction

"Hindi" the national language of India…
"English" the national language of UK and USA…
"Arabic" the national language of Gulf Countries…
"Japenese" the national language of Japan…
"Chinese" the national language of China…
Likewise many languages are there in this world…

The very purpose of any language is "communication"… Even though there are thousands of languages to communicate… Is there any universal language? If you guess and tell the answer that it is English… you are partly right… there are millions of people in this world, who does not know English.

Concept

To the world of business there is one universal language… all over the world the business community speaks through it… it understands this language easily… that language is called "ACCOUNTING".

Accounting is aptly called as the language of business, as it communicates the results of business operations to the users/stakeholders.

Accounting is as old as money. If we trace back the history of accounting, Indians have also contributed significantly towards the development of this language…

The thoughts of Kautilya have revealed the essence and importance of Accounting & Auditing in his literature called "Arthashastra".

In India we have history of accounting even 23 centuries ago… that's old story/history… I am not here to bore you by exaggerate the myth/story/history of accounting… but the facts…

Hats off to "Fra Luca Pacioli" the father of modern accounting (double entry system)… he was the one who introduced the balancing act of accounting… he was the one who said that both the aspects of a business transactions has to be recorded in the books of financial accounting…

The bottom line of accounting system is to provide full fledged information about various business transactions, which has some monetary value…

Conclusion - Why Accounting?

  • Today's modern manager relies mostly on proper, correct, relevant and timely information for decision-making.
  • Information has been recognized in todays' business world as one of the utmost important resources used by an organization.
  • Today's manager is in need of highly analytical and informative information for decision-making.
  • This accounting as a language of business serves/caters the needs of the business managers and to various users…
  • This business language - accounting supplies all the monetary information like:
    a. Profit or loss for a business
    b. Financial position etc., of a business for the users/stakeholders.
  • Entire process of any business needs accounting information… thus a depth study on the basics of accounting is inevitable for all managers… that's why there are compulsory courses like financial accounting, cost accounting, management accounting, financial management are included in the B-schools curriculum.
     


Author:
M. Subramanian
Faculty
Institute for Technology & Management
Chennai-28
E-mail:
financesubbuu@rediffmail.com / smart_subbu@indiatimes.com

Co-author:
Dr. Venkatachalam
Reader
PG Commerce Department, SVN College
Madurai-19
 

Source : E-mail July 21, 2004

 

B A C K

 

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