Accounting: The Language of Business, Investing, Finance, and Taxes

Accounting: The Language

of Business, Investing, Finance,

and Taxes

In This Chapter

Realizing how accounting is relevant to you

Grasping how all economic activity requires accounting

Watching an accounting department in action

Shaking hands with business financial statements

Mama, should you let your baby grow up to be an accountant?

Accounting is all about financial information — capturing it, recording

it, configuring it, analyzing it, and reporting it to persons who use it.

I don’t say much about how accountants capture, record, and configure financial

information in this book. But I talk a lot about how accountants communicate

information in financial statements, and I explain the valuation methods

accountants use — ranging from measuring profit and loss to putting values

on assets and liabilities of businesses.

As you go through life, you come face to face with accounting information more

than you would ever imagine. Regretfully, much of this information is not selfexplanatory

or intuitive, and it does not come with a user’s manual. Accounting

information is presented on the assumption that you have a basic familiarity

with the vocabulary of accounting and the accounting methods used to generate

the information. In short, most of the accounting information you encounter

is not transparent. The main reason for studying accounting is to learn its

vocabulary and valuation methods, so you can make more intelligent use of the

information.

...