Imagine if you were trying to learn a new language, and you were taught the idioms of the language right away, without first being thoroughly taught the grammar of that language. Chances are that when taught a language in this way, you may be able to construct a few sentences but you will not feel comfortable conversing in that language. Unfortunately, this is often how accounting is taught to students who are not in a full-fledged accounting program.
I have met a number of students who have consistently done well at school and college, and even have no trouble with numbers, but find themselves frustrated with accounting. I believe that the reason behind this reaction to accounting is the way it’s taught. Accounting is usually taught by illustrating examples of conventions for different type of business events. In most cases only a perfunctory overview is provided for what l like to call “the accounting logic”. Once a student has grasped the accounting logic, the rest of the journey with accounting should be exceptionally easy.
I recently tutored an engineer who was doing his MBA. Even with an excellent grasp of numbers, he struggled with accounting. The trouble was that he approached each accounting problem with the question “what is the accounting rule for this type of transaction”. I worked with this student to help him approach the problem with the question “how would the accounting system naturally treat this transaction and why”. While it is a very important in later stages and when practicing accounting to know the GAAP conventions for different business occurrences, the most important thing for someone starting out in accounting is to understand, how accounting works, and why it works in that way.
Students struggle with topics such as inventory, cash flow and accounting for leases because they fail to first understand, what each of the financial statements really is, and why a particular account appears where it does. I believe the journey to stop struggling with accounting starts with encouraging students to return to these basic questions with each transaction until it becomes second nature for them to see the internal logic.