The IRE Journal                      Summer 1991

                                                         Volume 4, Number 3

 

Business books that help

 

              By James K. Gentry

              University of Missouri

 

For the reporter truly seeking to understand  the financial side of business, this book is indispensable. Barney Calamer, chief of the Wall Street Journal’s Los Angeles bureau, says he gives a copy of the book to any newcomer to his bureau.

     Readers who are looking for pretty color, or snappy photos and eye-catching graphics won’t find them  in this book.  But for those who want a solid, somewhat sophisticated nuts-and-bolts information and analysis, Accounting: The Language of Business provides it.

     Don’t be put off by the title. Although this little book deals with financial operations, it is not an accounting text.  Rather, it is a combination of glossary material — unquestionably one of the most extensive collections of business and financial terms to be found — and analysis of financial statements. Any good reporter knows that the key to understanding any business or governmental agency is deciphering relevant financial documents.

     The glossary contains some 1,400 terms ranging from the everyday GAAP (generally accepted accounting principles) to the more sophisticated leveraged lease (you don’t really need to know). Since

Reviews of previous editions of Accounting: The Language of Business

the same terms often means different things to different disciplines of study, the authors take time to explain the shadings. For example, kiting a check means something different to a banker than to an auditor. The glossary also contains a wealth of information on financial ration, work sheets and the like.

     After the glossary, the authors provide extensive commentary on understanding financial data by examining a series of annual reports. Areas covered in detail include well-done annual reports, an explanation of inflation accounting vs. current cost accounting, a review of how “accounting magic” can be performed on a company’s financial statement and an analysis of the Penn Central’s annual report just before the railroad declared bankruptcy. The annual report material can be demanding and somewhat tedious, but it also offers the inquiring reporter a stream of practical tips. If, indeed, accounting is the language of business, this handbook is an essential reference for those of us who must translate it.