What is Modern Accounting Definition?

Here we will study about the Modern Definition of Accounting.

Accounting Definition By American Institute of Certified Public Accountants (AICPA) is very famous around the world as it describes the whole Process or Steps in the Accounting Cycle in which accounting exists in the business life of Smaller, middle and Larger Scale Companies or Corporations. These businesses include Sole Proprietorship, Entrepreneurship, Partnership, Companies, Organizations and Corporations.

The Definition given by American Institute of Certified Public Accountants is shown below:

“Accounting is the art of recording, classifying and summarizing in a significant manner and in terms of money, transactions and events, which are, in part at least, of a financial character and interpreting the result thereof”.

The above definition can be written in a summarized way (which is Modern Definition of Accounting) as shown below:

“Accounting is the Art of Identifying, Recording, Classifying, Summarizing and Interpretation of the Results gathered from the whole Accounting Cycle and communicates that financial information to economic users”.

From the above definition of Accounting, we can explain the definition in different segments according to the Steps in the Accounting Cycle.

Recording is done in Journal. Classifying is done in Ledger. Summarizing is done in Trial Balance and finally interpretation of information is presented in the form of Income Statement or Profit And Loss Account, Balance Sheet, Statement of Cash Flows, Statement of Changes in Equity, And Notes To The Accounts. All final information is interpreted through Accounting Ratios, and reported in Financial Statements that are the parts of Annual Reports. These Annual Reports are provided to User of Financial Statement that are interested in the business of the company.

So, Accounting this is the Accounting Modern Definition or What is Accounting in the modern world of Accounting.