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- QUESTION
Assignment Details
This assignment has 3 parts:
In today’s global marketplace, business is conducted on every continent, in different currencies and in many languages. Even so, it is often said that accounting is the language of business.
When there are so many other options, why do you suppose accounting would be considered the language of business?
If accounting standards differ by country – and some do – what are your thoughts about how the phrase could still be true?
Thinking about your experience as a consumer, share an example of how accounting could be considered a language of business.
| Subject | Business | Pages | 4 | Style | APA |
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Answer
Accounting as the Language of Business
A language denotes a structured and complex system of either written or spoken communication. It could also be in form of cues and gestures (non-verbal) communication or verbal communication. The use of this term in business results into a concept known as ‘language of businesses’. According to Bloomfield (2008), the term ‘language of business’ is commonly used in financial accounting to mean the codified representation of empirical figures and computations, which are then shared among stakeholders, especially shareholders. It is upon this understanding that this three-part paper answers the questions; why accounting is considered a language of business, thoughts about differing accounting standards across countries and third, example of how accounting can be considered as a language of business.
Just like a normal language, accounting is considered a language of business because it is used by managers to represent financial information and communicate to stakeholders such as creditors and shareholders. The language is communicated around the world, yet it can only be interpreted by people who are financially literate (Wright, 2019). In addition, accounting can be considered a language of business because it is universally accepted. This means that the language in which accounting information is coded is acceptable across different countries.
The phrase ‘accounting is a language of business’ still holds when different accounting standards are used. For instance, different countries have variations in their languages. This is the case with accounting languages where accounting standards could be varied from one region to the other. For instance, the USA uses Generally Accepted Accounting Principles (GAAP) while Asian countries like China uses International Financial Reporting Standards (IFRS) (Islam & Sharif, 2017). As a consumer of accounting data, I encountered a scenario where I was to audit financial reports for Walmart. Notably, this retailer operates in UK as ASDA which prepares independent financial reports adhering to the UK standards. On the other hand, Walmart prepares its reports using US GAAP standards. This scenario made me realize that accounting as a language of business, was also prone to language barrier, just like the natural languages.
This paper has evaluated the statement ‘accounting as a language of business. It has compared the ability for accounting to report and communicate information on the performance of an organization, to the natural languages used to communicate among human beings. The paper has further illustrated that just like natural languages, accounting is varied across countries. The last section has detailed a scenario where a consumer of financial data experienced language barrier, resulting from variations in accounting standards across the US and UK firms.
References
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Bloomfield, R. J. (2008). Accounting as the language of business. Accounting Horizons, 22(4), 433-436. Islam, M. R., & Sharif, M. A. (2017). Accounting as a Language of Business: A study for conceptual understanding. International Journal of Scientific Research and Management (IJSRM), 5(11), 7404-7410. Wright, R. S. (2019). Should Accounting Be the Language of Business? Research-Technology Management, 62(4), 53-55.
Appendix
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