Learning accounting can be a challenge for even the strongest students. Explore these nine tips from an accounting professor on how to make getting an A in accounting much easier.
Step 1: Immerse yourself in the language of Accounting.
Accounting is a language. The best way to learn a language is to immerse yourself in it. If you want to learn Spanish, you can go to Spain and spend a semester or a year immersing yourself in the language and culture. By doing this, you really start to learn everything you can about Spain and about how to speak Spanish. Learning accounting is very similar, but the food isn’t as good. If you immerse yourself in the accounting world, you really start to understand it better and better. What does “immerse yourself in accounting” mean? Read on!
Step 2: Study to understand rather than to memorize.
To really do well in accounting, you will need to build your understanding. Building understanding doesn’t come from memorizing for a test and immediately forgetting the material after the test is done. Understanding comes from applying concepts and making connections.
Often, it is difficult for students to apply concepts and make connections with accounting because they may have limited exposure to accounting in action. But we can all understand accounting from the point of view of “kitchen table” accounting. That’s where we sit at the table and figure out how much money is coming in and how much is going out. What’s left over? That’s accounting in action.
Money coming in is our Revenue. Money going out is our Expenses. What’s left over is profit (or loss.) There’s our income statement or profit and loss statement. Revenue minus expenses equals profit or loss. Those are the connections we can make easily between our textbook and our pocketbook.
Step 3: Test yourself on accounting terms.
Just like any other language, accounting is rich with terms, phrases, vocabulary, and idioms. When you come across a term you don’t know or have forgotten what it means, don’t skim over it. Look it up. What you are doing when you read or re-read a definition is reinforcing the information in your brain. You’re saying, “Hey, Brain, I need to remember this.” Every textbook will have a glossary of accounting terms, and a quick internet search will provide answers, too.
Step 4: Practice, Practice, Practice
Practice problems over and over until you can do them in your sleep. Your textbook is a great source of sample problems. Work them through with the book first. Then, work them through without the book. As you practice, it builds pathways in your brain. The more you practice, the quicker the knowledge takes hold. Usually, your textbook will include an illustrative problem. Spend as much time on it as possible.
In particular, look for patterns. Some transactions are done over and over. For example, if a transaction involves an expense account, you will see a journal entry to debit the expense and credit accounts payable. Every transaction for any expense will be the same. The account name and the amount is all that changes (Telephone Expense or Supplies Expense or Rent Expense—all increase by a debit.)
Step 5: Understand the relationship between financial statements.
When you begin to understand the structure of accounting, you will better understand the relationship between the end product—the financial statements. The financial statements have a particular order in which they are prepared because each one is linked to the next one.
For example, we figure Net Income (profit or loss) on the Income Statement (Profit & Loss Statement). That Net Income number flows through to the Statement of Owner’s Equity where we track increases and decreases to Owner’s or Shareholders’ Equity. The net increase or decrease on the Statement of Owner’s Equity flows through to the Balance Sheet.
In accounting, it’s all inter-related. Understanding those relationships leads to a greater understanding (and appreciation) of the system that is accounting.
Step 6: Read annual and financial reports of publicly traded companies.
Every publicly traded corporation produces an annual report and releases financial information on a regular basis. We have access to that information and can use it for our own educational purposes. Choose a company you are interested in (publicly traded, meaning it sell stock to the public). Go to the company’s website and look for its investor area, or search for “company name” annual report). Within those annual reports lies a tremendous amount of financial information.
As your financial education grows, you begin to understand exactly what’s being reported in those financial statements. You can locate the Income Statement and see how Revenues and Expenses are being reported. You can study the Balance Sheet and see how Assets, Liabilities, and Equity are reported.
Again, this gives you an opportunity to train your brain to make the connection between what you are seeing in your textbook and what you are seeing in an annual report.
Step 7: Look for ways to apply the concepts to real world examples.
Applying the concepts from your textbook can be done in other ways, too. For example, if you’re learning about depreciation, you can look around you wherever you work or when going into a grocery store or a restaurant.
How many Fixed Assets (Property, Plant, and Equipment assets) can you identify? The delivery van, the frozen foods freezer units, the customer service desk are all examples of Fixed Assets that are being depreciated.
One of my students commented that having taken a semester of accounting had completely changed how he looked at the world of business. When you make those real-world connections, it can do just that.
Step 8: Ask your professor and accountants questions.
Another way to expand your understanding of accounting is to ask your accounting professor lots of questions. Not just about accounting, but about being an accountant (if they are an accountant) or what they liked about learning about accounting, what they found hard about learning about accounting. Those are things that can help you understand accounting better.
And, it also helps your professor understand how to teach accounting better to a wide variety of learners. My students are my greatest teachers because they each have their own world view and learning style.
You can also talk to accountants, tax preparers or bookkeepers you know, and them questions. The side benefit of this is that you are building a professional network at the same time. (Join my professional network on Linked In: https://www.linkedin.com/in/caroline-d-grimm-b0760a66/)
Step 9: Watch Accounting How To videos on YouTube.
We live in an amazing time where Accounting How To videos can be easily found on YouTube. These videos help to explain topics and reinforce learning. You can find a creator whose style works well for you, in whatever language you speak, in whatever country you live in. Take full advantage of that. Of course, we are always happy to have you subscribe to Accounting How To, but the important piece is to find a creator whose presentation style works best for you and your learning style.
The more you immerse yourself in the accounting universe, the more quickly you develop an understanding of how accounting works. Oddly, the good grades follow.