I have been golfing for about 40 years and I still cannot get it right. I have had more lessons than anyone I know. I have practiced, watched movies, read books, listened to golfing friends (OK, that was a mistake), and… I’m still a lousy golfer.
However, there is one lesson I do remember, which brings me to the topic of this blog.
I used to have an awful slice. To all you non-golfers reading this blog, that means that the ball flies off to the right instead of going straight. I compensated for this incorrect trajectory by standing farther to the left.
During a lesson a pro said to me, “Neville, don’t do the wrong thing more efficiently.”
I never forgot his words. He suggested that I create a short list of the basics and keep it inside my cap, so that whenever I have a poor shot, I can look at the list. It went something like this:
- Check your stance.
- Check your grip.
- Keep your head down
How does this relate to teaching accounting?
Simple. If your students get the basics right, the rest will follow.
Ready, Aim, Fire — not Ready, Fire, Aim
Here are some examples of where students fail to learn the basics while still being taught more complex matters.
Adjustments. Many students learn debit and credit transactions by heart, but they don’t actually understand what an adjustment really means. Once they understand the logic of an adjusting entry, they won’t struggle with compound entries.
Consider this approach:
Do your students understand the real meaning of equity? Here are 2 typical textbook explanations:
- A method of accounting whereby a corporation will document a portion of the undistributed profits for an affiliated company in which they own a position.
- Equity is what the owners of an entity have invested in an enterprise. It represents what the business owes to its owners. It is also a reflection of the capital left in the business after assets of the entity are used to pay off any outstanding liabilities.
No wonder these poor 18-year-olds hate accounting!
While these definitions may technically be correct, how about using plain English?
[You may get a kick out of read my last blog that talks about Tappers and Listeners – the curse of knowledge]
If you sell all the things that you own (assets) in your personal life and use the cash to pay whatever you owe (liabilities), the remaining cash represents how much are worth. This is called your “net worth.”
The net worth of a business works off the same principle. The net worth of a business is called one of several names: owner’s equity, shareholder’s equity, stockholder’s equity, etc. It is simply a name that represents the net worth of a business.
The Ultimate Economic Test:
Are you accurately reporting the net worth of your business?
To do this, various accounts need to be adjusted to represent their correct value.
Step 2. Explain the meaning of an adjustment
Adjusting the value of various accounts to accurately represent the net worth of the business (exclude contra accounts adjustments): For example:
If all the assets on your balance sheet are worth $100,000 and you owe $70,000 then the net worth of the business is $30,000. If your assets are not worth $100,000, then they need to be adjusted to a lesser value. An example might be inventory. If your balance sheet states that inventory is worth $10,000 but some of it is old and not saleable then its value will need to be adjusted down to its correct value. This results in a decrease to the net worth of the business. A decrease to net worth is called an expense.
Here are three ways to record an expense:
- Decrease (credit) cash, which decreases equity and is recorded as an expense on the income statement. Increase (debit) the expense that caused equity to decrease.
- Decrease (credit) any other asset, which decreases equity and is recorded as an expense on the income statement. Increase (debit) the expense that caused equity to decrease.
- Increase liability (credit), which decreases equity and is recorded as an expense on the income statement. Increase (debit) the expense that caused equity to decrease.
Here are some cool illustrations how Accounting Maps™ are used to demonstrate this simple concept. Remember that a picture speaks a thousand words!
Now onto the adjustments: Adjust the value of assets.
A decrease to the value of:
- accounts receivable is called bad debts
- inventory is called shrinkage
- prepaid expense is called (whatever expense was prepaid)
- assets is called depreciation
Do you know that there are only 29 combinations of debits and credits?
The final message? Don’t make it simpler. Just make it simple.
In my next blog I will explain a simple way to teach the three ways to recognize revenue.
Categories: Academic Blog
Then again there are a lot of funny people but what makes this man so special?
When playing the part of Mr. Bean he does not say a word. It’s his behaviour that we remember! Whenever I remember one of this his gigs, I laugh.
The word remember is the operative word (and who could forget a face like that?).
(By the way, if you want to cheer yourself up take a look at some of his quotes at the bottom of this blog)
You may be wondering what this has to do with teaching accounting.
The majority of students (and non-financial professionals) struggle to learn accounting principles.
Let’s face it: many students and non-financial folk alike give accounting a bad rep. People find it intimidating, boring and for the most part useless especially to the individual who has no intention of becoming an accountant.
What a tragedy. Understanding accounting principles is a life skill that everyone should know and I’m of the belief that accounting gets a bad rep for the wrong reason.
So how can we change this misconception about accounting and persuade students that learning accounting principles is a crucial life skill?
Well to start, let’s come back to Mr. Bean. Why is it that one remembers so much about Mr. Bean’s jokes and behaviours with no words spoken and yet students struggle to remember subjects about accounting with hundreds of pages of text, PowerPoint slides and lectures.
The following quote was extracted from Michigan State University website which describes the 3 ways in which people learn: visual, auditory and kinaesthetic. http://learndat.tech.msu.edu/teach/teaching_styles
“Howard Gardner’s Multiple Intelligence Theory can be employed by making a conscious effort to include activities that incorporate various abilities or “ways of knowing”. Traditionally, instructional methods tend to favour verbal-linguistic and logical-mathematical intelligences, and don’t focus on the arts, self-awareness, communication and physical education. By employing roleplaying, musical performance, cooperative learning, reflection, visualization, storytelling, etc. as well as assessment methods that account for the diversity of intelligences, the learning experience can be richer for all students.”
This Information chart was extracted from the same resource.
I appreciate that it’s difficult to add Mr. Beans humour and facial expression to accounting lessons but one thing is for sure… students will be more engaged and demonstrate better results when using interactive and engaging materials..…and I can prove it.
In 1997 we developed and patented a multi-sensory training tool (audio, visual, colour coded and tactile) that resembles a board like game to teach double entry accounting to non financial professionals. The system uses colour coded income statement and balance sheets together with colour coded T-Accounts with money markers representing values.
Whenever delivering interactive workshops I kept hearing “I wish I had learned accounting like this in college”. So that’s what we did. Together with a team of enthusiastic people we developed the used the same technology to developed course curriculum.
Since completing these resources 5 years ago those colleges and universities using our system have experienced unprecedented results.
Why does this work?
Do you remember when your teacher showed you pictures of a cat, a dog, a chair etc… when you first started learning to read and write? The picture was associated with large words that spelled the name of the object in the picture.
Your teacher also said the words out loud while pointing to the image. That’s how we learned in the “old days”. In fact your teacher was instructing you to use all your senses to learn. Sometimes you would even smell the item such as a lemon or a mint leaf. She ensured that you used all your senses. In short, we learn best through all our senses.
One of the advantages of using visual, audio and tactile materials to support textual ones is that the resulting mixture of styles means that teaching will be appropriate for a wider range of learners. It’s not all that difficult, just look at what you’re already doing, see what senses are already being used, see how the task could be extended to use at least one other sense too.
A picture paints a thousand words. Mr. Bean proves this point
I use the following effective example when training non financial professionals about capital and operating budgets.
Example: Buying assets with cash and debt.
Buy a car for $15,000. You will pay $5,000 in cash and borrow the balance of $10,000.
- Step 1. In exchange for a $5,000 deposit you receive the front of the car. (Students find this humerous but it also makes them think).
- Step 2. in exchange for a $10,000 loan you are shipped the back of the car.
- Step 3. Test the logic. What happens to your net worth when you receive the full car?
Nothing of course. This concept demonstrates the difference between capital and operating budgets which is introduced later on. It is also used to illustrate the rule of materiality.
Notice the simplicity of this example. Linking transactions to familiar photos helps teach in context.
I call this contextual layered learning because the student can relate to a familiar topic in context.
Quotes by Rowan Atkinson
- Speaking to the devil: “Okay, are there any questions? Yes? No, I’m afraid we don’t have any toilets. If you had read your bible, you might have seen it was damnation WITHOUT relief.”
- “As I was leaving this morning, I said to myself ‘the last thing you must do is forget your speech.’ And sure enough, as I left the house this morning, the last thing I did was to forget my speech.”
- “You’re about as useful as a one-legged man at an arse kicking contest.”
Categories: Academic Blog
It’s tough to communicate abstract topics
Jonathan is an intelligent first year business student who achieves excellent math marks. He also demonstrates an exemplary work ethic.
He has been attending your financial accounting course but cannot get a grip on the concept of accruals. In his mind when cash is used, equity decreases and no amount of explanation seems to work.
Sadly, Jonathan is frustrated and is about to give up the class because he believes that he is just not cut out for business and accounting. You are on the other hand have used every imaginable resource to help him see accruals for what they are.
Just when you thought that your student “got it”….. he failed a test! Do you blame your teaching methods? Was the test too hard? All sorts of thoughts probably cross your mind.
I have taught business literacy for years to math smart engineers, doctors, lawyers and other intelligent professionals who struggle with accounting concepts so I understand how frustrating it can be to communicate difficult or abstract topics.
It is a tragedy that so many students fail basic accounting!
Sadly, first semester accounting failure rates are unacceptably high and the poor souls who fall by the wayside miss out on so much crucial knowledge when they enter the business world. Undoubtedly we would live in a better economic world if more people were financially literate. Understanding basic accounting concepts is a life skill that everyone should know. (I have some strong opinions on this topic which I will share with you in future blogs posts).
The good news is that many failures are avoidable. I’m going to share some ideas that are guaranteed to improve students results and alleviate stress on your part…..but first some context.
I don’t understand how electricity works
I don’t profess to be a technical genius but I’m quite handy when it comes to fixing things and I have a basic (self taught) knowledge of how to perform simple electrical tasks. I thought it time to raise the bar.
I signed up for an electronic course. After the second lesson I gave up because the instructor lost me. Here are some of the reasons:
a. He thought he was teaching basics when in fact he leapfrogged over them
b. He used jargon with which only HE was familiar rather than explaining from the students perspective
c. There was little context to the materials. I did not understand the logic of what he was trying to communicate
I have learned to empathize with students because learning about electronics is about as abstract to me as accounting is to an 18 year old with no business frame of reference.
So what does this have to do with teaching accounting?
In my last blog post I spoke about 6 of the many frustrations that instructors endure when teaching accounting to students. Why does this happen and what can we do about it?
The answer may be simpler than you think.
Tappers and Listeners
In 1990, Elizabeth Newton earned a Ph.D. in psychology at Stanford by studying a simple game in which she assigned people to one of two roles: “tappers” or “ listeners.” Tappers received a list of twenty-five well-known songs, such as “Happy Birthday to You” and “The Star Spangled Banner.” Each tapper was asked to pick a song and tap out the rhythm to a listener (by knocking on a table). The listener’s job was to guess the song, based on the rhythm being tapped.
The listener’s job in this game is quite difficult. Over the course of Newton’s experiment, 120 songs were tapped out. Listeners guessed only 2.5 percent of the songs: 3 out of 120. But here’s what made the result worthy of a dissertation in psychology. Before the listeners guessed the name of the song, Newton asked the tappers to predict the odds that the listeners would guess correctly. They predicted that the odds were 50 percent. The tappers got their message across 1 time in 40, but they thought they were getting their message across 1 time in 2. Why? When a tapper taps, he or she is hearing the song in his or her head and it’s impossible to avoid hearing the tune you just heard. Meanwhile, the listeners can’t hear that tune — all they can hear is a bunch of disconnected taps, like a kind of bizarre Morse Code.
It’s hard to be a Tapper
The problem is that tappers (teachers) have been given knowledge (the song title) that makes it impossible for them to imagine what it’s like to lack that knowledge.
When they’re tapping, they can’t imagine what it’s like for the listeners (the student) to hear isolated taps rather than a song. Newton refers to this concept as the “Curse of Knowledge”. Once we know something, we find it hard to imagine what it was like not to know it. It becomes difficult for us to share our knowledge with others because we can’t readily re-create our listeners’ state of mind.
How to be a better Tapper
You may be a really good “tapper” but still struggle to connect with some students when teaching difficult or abstract subject matter. Here are some tips to help you become an even better “tapper”.
1. Try the Tapper and Listeners concept with friends and you will see that it works (it’s actually fun).
2. Apply your mind to this concept whenever communicating a tough topic. It will help you be more empathetic.
3. Don’t assume that students understand basics principles. I thought that my knowledge of electricity was basic until I met someone who did not know how to knock in a nail or use a screw driver.
4. Separate numeracy from principles. Sometimes students understand accounting principles but are challenged with numbers. Separating them may help you indentify the root cause of the problem.
5. Use a layered learning approach. Test principles one baby step at a time before continuing to a higher level.
6. Teach in context. Most students have no business frame of reference…nor do they appreciate the value of the lesson, logic of what is being taught or the importance of the material being learned.
My next blog post will introduce some tools and approaches that will save you a lot of time and effort when teaching in ways you would never have thought possible!
Do you as an instructor suffer from any or all of these frustrations about your students?
1. They don’t prepare for class
2. It’s like pulling teeth to get students to do their homework
3. Even your brightest students cannot get a grasp on some topics that you deem basic
4. Students seem to forget what they learned from one week to another
5. They rely on their memory but just don’t seem to grasp the principles
6. They don’t see the relevance of the subject matter
There are those students who simply don’t care to learn and no matter what you do, no matter how hard you work to motivate them, they will simply take no interest and will do the bare minimum that it takes to pass. I’m not referring to those students. I’m referring to the students who are willing to work but “just don’t get it” because they are unmotivated or struggle to grasp the logic of various concepts.
So why do instructors suffer from this dilemma?
I discovered this frustration when I was in the manufacturing business implementing a turn around. Here’s my story:
As part of the turnaround of a midsized manufacturing company I adopted an assortment of initiatives including Just In Time Inventory ( JIT), Lean Manufacturing, The Theory Of Constraints (TOC), and Total Quality Management (TQM). The most powerful enabler of the turnaround was the creation of an open book environment and profit sharing program with 400 unionized workers. I’m of the belief that no one washes a rented car because there is no sense of ownership. The same principle applies to employees. However, the initiative required non-finance employees to understand and interpret financial statements and the financial implications of their actions.
I began educating the employees about income statements and balance sheets using traditional materials, including some content from college accounting curriculum. The materials overcomplicated simple concepts and ineffectively connected the lessons to the practical implications of personal and business financial management. In desperation I tried a non-traditional approach to teach these concepts. I cashed $2,000 in small bills and crumpled them into a plastic garbage bag. I assembled all the staff at the back of the factory and poured the crumpled bills onto a table. “This is called revenue” I said. I placed a handful of cash in a bucket and labelled it “wages”. I continued the exercise with different buckets labelled “material”, “rent”, “maintenance”, “insurance” and then started tearing up $20 bills and throwing them into a bucket called “waste”. The employees were silently shocked when I tore up the bills. “Why are you freaking out?” I asked, ”you do this every day but just don’t see it”. (I taped them together when no one was looking!)
At the end of the demonstration, some cash remained on the table and I said “what is left and lying on the table is called profit.” I shifted some of the remaining cash toward the crowd and said “this is for all of you for your special hard work performed this year. The remainder is for the owners in return for all the financial risk they take to support this business.” The group was stunned, and they finally understood the message I was trying to deliver. As a result of successfully implementing this initiative, key financial metrics dramatically improved; inventory levels decreased, accounts receivable were collected faster, low margin products were eliminated, unprofitable customers were turned away.
I learned 5 important lessons that hold true for teaching in academic institutions.
So how did the crumpled-money exercise have such a profound impact on the company? It was not the employees’ fault they didn’t understand the traditional materials, it was the fault of the materials used to teach the concepts from the instructor’s point of view rather than the “students” perspective.
1. Because I was interested in the topic it did not mean others were interested. It was my responsibility to engage my employees and make them interested
2. I was teaching from my frame of reference rather than from my employees point of view
3. Using engaging and interactive mediums to transfer knowledge is essential to teach effectively
4. What I thought was basic was not basic to my employees. I had to learn to empathise with my audience and teach at the appropriate level one step at a time.
5. Teaching in context is crucial
There is a solution!
My future blogs in this series will talk about creative and powerful ways to help you communicate accounting principles in a painless manner that will improve comprehension and student retention.