Why Accounting is Considered the Language of Business

Good accounting practices are absolutely vital to the running of any type of business. No matter what industry you’re in, it’s important to have reliable financial records and good accounting reports that can help you back up your business decisions. In fact, accounting has often been called “the language of business,” and those in positions of power in business have been advised to master accounting terms so that they can speak more fluently when it comes to the internal and external affairs of the company, so many of which are financial in nature.


When it comes to understanding and reporting on the success of your business, it’s important to be able to point to records. You need to show, through financial accounts, what aspects of your business have performed well and which have room to grow. And the best way to do that is through conscientious bookkeeping.

But it isn’t enough to simply keep a record for your own purposes. You want your books to be understandable to anyone with whom you should choose to share them, without your having to sit by their side and translate. That’s why it’s so important to use the common business language of accounting in the keeping of your books. Just a few of the terms that will help you:

  • Balance sheet – this describes a list of everything that is owned by your company, as well as everything the company owes.
  • Total debt ratio – refers to the long term solvency of your company, and is a good way to project your chances at long term success.
  • Liability – anything that is owed by your business to outside parties of any nature. This can also be described as debt.
  • Liquidity – the ability of any of your assets to be converted into cash.
  • Break even point – the moment in your business’ proceedings when your income is enough to cover your expenses.

If you are conducting business in the language of accounting, you will be able to describe your finances and show records to back up what you say.

Tax Preparation

A study released by the US Government’s General Accounting Office revealed that over ¾ of all taxpayer felt they had benefited from using professional CPA services. Whether you’re getting help with tax preparation for your personal accounts and your family or your business, it helps to consult with a professional and get your papers in order in advance of filing. But in order to do so, everyone needs to be speaking the same “language” — the language of accounting. The language of business.

Market Comparisons

One of the most reliable ways to evaluate how your business is doing is to compare it against other, similar businesses in the same market. You can interpret your balance sheets and financial records by comparing them to those of other businesses whose financial details are a matter of public record. This can be especially beneficial to small business owners, who can use every advantage they can get to better position themselves in the business world.

Becoming familiar with and fluent in the language of accounting makes all the difference in the world when it comes to building a successful business. The more comfortable you are speaking of financial affairs, the better you are positioned for success.

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