d helps the business function.

Assets differ from business to business depending on what those

businesses do, how they operate, and their position in the supply chain.
Business assets can range from inventory and cash to state-of-the-art equipment, buildings, and
intellectual property. You can generate value by operating, monitoring, maintaining, and selling
those assets through the process of asset management.

What are the differences between current and

non-current assets?
The main difference between non-current and current assets is longevity.
Non-current assets, also known as fixed assets, are assets that your business holds for longer
than 12 months and uses as a source of long-term revenue generation. They usually have a high
value, benefit the business for long periods, and cannot quickly be turned into cash.
Current assets are items that your business uses in its day-to-day operations and owns for less
than 12 months. You use current assets to generate cash flow for the business and you can
liquidate them quickly to fund your ongoing operations and cover your expenses.
On top of longevity, there are also a few other differences between non-current and current
assets:

Valuation
You can value non-current assets by subtracting the accumulated depreciation from their
purchase price.
Your current assets have a market value, i.e. a price they can be sold for at the time.

Taxation
Your non-current assets are taxed as capital when you sell them and you pay capital gains tax.
Your current assets are taxed as revenue when you sell them and you pay corporate income tax.

Depreciation
Your non-current assets usually depreciate over time and their value reduces gradually on the
balance sheet.
Your current assets do not depreciate but their market value can rise and fall.

Who are the Users of Financial Statements?

There are many users of the financial statements produced by an organization. The following list
identifies the more common users and the reasons why they need this information. In short, there are
many possible users of financial statements, all having different reasons for wanting access to this
information.

Company Management

The management team needs to understand the profitability, liquidity, and cash flows of the
organization every month, so that it can make operational and financing decisions about the
business.

Competitors

Entities competing against a business will attempt to gain access to its financial statements, in order
to evaluate its financial condition. The knowledge they gain could alter their competitive strategies.

Customers

When a customer is considering which supplier to select for a major contract, it wants to review
their financial statements first, in order to judge the financial ability of a supplier to remain in
business long enough to provide the goods or services mandated in the contract.

Employees

A company may elect to provide its financial statements to employees, along with a detailed
explanation of what the documents contain. This can be used to increase the level of employee
involvement in and understanding of the business.

Accounting is known as the language of business because it serves as the mode of

communication that is used to pass on information in the business world.

Businesses deal with their investors and creditor whose vested interests are based on the ongoing
success of the venture. If any type of business is unable to meet its obligations, it will have no
choice but to shut down.

Accounting information makes it possible to keep track of its finances and prevent it from
closing down.

Let us discuss the 6 reasons why accounting is the language of business.

It is a Standard Mean of Communication Across the Globe

Accounting is generally regarded as a language that is understood around the globe, just like
music and art, it is an intrinsic part of daily life. Numbers function in the same way regardless of
where you are located in the world.

Learning accounting is a task that is comparable to becoming familiar with a new language.
However, the dynamic nature of business can make this language appear to be complicated. It is
constantly changing to accommodate different situations and provide better ways to
communicate.

Accounting take a practical approach by being standardised, making it a form of communication

that is developing concepts and principles as time goes on through accounting rules and
regulations.

For example, understanding balance sheets does not require the services of a professional
interpreter, which is evident in how global business deals and mergers are carried out.

While an investor might not be well-versed in the intricate details of a particular industry, all it
takes for them to determine whether or not a business can possibly be a worthwhile investment is
to go through the organisation’s financial statements.

Accounting has Historically Evolved

 Accounting has been in existence since time immemorial from the advent of monetary
transactions. It has undergone an evolution, similar to the changes that various languages have
gone through in response to the financial and social needs of any society.

People from different civilisations have sustained a range of human activities, including the way
they speak and keep records of their business ventures. The discovery of ancient tablets that
detailed wages around 600 BC in Babylonia makes it clear that there has been a need for
proper accounting and communication for a long time.