Accounting is referred to as “the language of business” because all firms
communicate to each other and to the financial world through accounting. Accounting
records of a firm are developed into financial statements that are analyzed to make
decisions that affect that firm, other firms, or even a person’s life. Because accounting is
so integral to the modern financial world, business students today should have some
accounting education.
Some occupations require deep analysis of accounting records and financial
statements. In this situation, an employee would find it difficult to operate without a
basic knowledge of accounting. A bank’s loan officer, for instance, determines the risks
and rewards of lending to certain firms or individuals. Only after thorough investigation
of accounting records would the loan officer determine whether to issue the loan.
It is also crucial for a firm to have decision makers who know and practice basic
accounting. To truly understand a firm’s transactions and their effect on the firm, one
needs general accounting skills. A decision maker would need these skills in order to
comprehend their company’s finances and make decisions that are financially responsible
and benefit the firm.
Likewise, individuals make financial decisions that would be made easier and
more advantageous if the individual enjoyed knowledge of accounting. Decisions, like
whether to lease or buy a car, are made with the most benefit to the individual after
analysis and comparison of the accounting data that applies to each choice. Since
accounting communicates financial figures between all firms and individuals, it is to the
direct benefit of business students to learn the basics of accounting.