Accounting education, reimagined for everyone

By Gabriele Ligenfelter, CPA, MBA and Abby Brooks, CPA, MSA

Every undergraduate business program requires at least one accounting course. Typically, all business students are required to take a principles course, even if they are not accounting majors. This is because of the utility of the foundational accounting knowledge. All business people should understand how to use financial statements.

“An introductory accounting class is critical, as everyone needs accounting knowledge,” said Jim Holland, CPA, adjunct professor at Virginia Commonwealth University (VCU) and 2016-2017 chair of the Virginia Board of Accountancy. 

The value of basic understanding of accounting is widely accepted, even outside the business school, which is why many of the students in accounting principles classes are not only not accountants, but are not business students at all. How can accounting professors serve these non-business students as well as the business students in the same class? Should content, pace, assignments, etc. be adjusted to best fit the needs of these two distinct groups of students?

At Christopher Newport University (CNU), we think so! And so do many other Virginia schools.

Most of us teaching the accounting principles course in undergraduate business programs have encountered this scenario of 25 students in class: Five accounting majors, 10 business majors, five required to take the course for their business minor or some other major requirement and five taking it “for fun” or because their parents told them to. In this situation, business concepts are completely new to almost half the students, while the other half understand how accounting fits into their chosen niche of business study. The accounting professor is left to manage the widely varied needs of the students: one group requires less detail and more time to grasp new material while the other is ready for the rigor and pace often found in business programs.

When the traditional accounting principles course is not altered to better serve the group of non-business students, the students often do not truly grasp basic accounting ideas. These students should achieve a certain level of accounting knowledge upon completing an introductory course. Not only are the students not receiving the focus they need, the accounting majors may not get the in-depth coverage to gain technical proficiency to advance to the next accounting class.

We believe that these students can only be served by separate courses.

Different students, different course

The idea that early accounting education should be different for those not intending to enter the field is not new. Research has addressed this issue since the early 1960s with discussions about different teaching techniques and separate courses for accounting and non-accounting majors.

Many undergraduate business programs in Virginia offer an accounting course for non-business students (and/or non-accountants). VCU and James Madison University (JMU) offer a separate introductory accounting course for non-business majors, Old Dominion University (ODU) offers a course for non-accounting majors interested in starting their own businesses and George Mason University (GMU) offers an accounting survey course open to any student. At CNU, we offered ACCT 200, Accounting Concepts, for the first time in spring 2017.

ACCT 200: Fresh off the design board

At CNU, Accounting Concepts is intended to offer a basic understanding of accounting and business concepts from the perspective of financial statement users, rather than the preparer perspective taken in the traditional principles course. Table 1 presents the difference in the topics between an ACCT 200 and ACCT 201, the traditional accounting principles course.

In the new course, the topics are the financial statements themselves, rather than the financial statement elements, which is a slight but powerful difference. While it is true that everything listed in the 201 topic list is mentioned in the 200 course, the depth of coverage is significantly different.

For example, in ACCT 201, the topic of long-term assets typically includes the following items: initial capitalization of cost, cost allocation using three depreciation calculation methods (straight-line, units-of-production and accelerated method), analysis and recording of subsequent expenditures and finally recording asset disposal at wash, gain and loss.

In contrast, the accounting concepts course presents long-term assets in the context of the balance sheet to include discussion of the following: initial capitalization of cost and the basic concept of cost allocation from the balance sheet to the income statement. Only very simple calculation examples using the straight-line method are presented to the non-business students. Subsequent expenditures are also discussed in the concepts course, but only to explain that significant investments in existing equipment increase the asset reported on the balance sheet while maintenance costs do not.

Another example of the difference in level of coverage can be seen in the adjustment of an assignment typically presented in a traditional course. The traditional assignment requires students to use financial statements to identify important figures, calculate financial rations and pull information from the notes to the statements. Accounting Concepts students complete a similar assignment, but with a more basic requirement of simply finding figures on the statements. Table 2 gives examples of the types of questions asked of non-business students as compared to business majors.

No scary debits and credits

The difference in the depth of coverage does not required that the non-business students learn the language of accounting that is the debit/credit code, presenting a significant change to the way accounting is taught. At CNU, the entire concepts course is presented with only a passing mention of debits and credits. Rather than analyzing transactions to determine which account to debit or credit, these students learn which statement elements are increased or decreased as the company conducts business.

Ellie Duvall, a communications major and Accounting Concepts student at CNU, said: “The fact that this course focused more on overarching concepts of accounting rather than specific accounting techniques was extremely helpful for me. As a communications major, I had a pretty limited background in accounting before taking this course. I got a glimpse into the complexities of the subject, which made me appreciate accounting significantly more. I can now say I understand the fundamentals of accounting, as well as how it applies to my life, regardless of what I am studying.”

For the students that do not intend to pursue a business education, a basic level of understanding is appropriate. Rather than the intimidation of the traditional principles course, non-business students often enjoy the experience in the concepts course, so it is important to consider the outreach potential of such a course.

“I was hesitant to even pick up an international culture and business minor because the business curriculum was intimidating,” Ellie said. “I wasn’t sure I’d be equipped for the few classes I had to take as a minor in the midst of business school students. But this class was filled with students from every major, which immediately put me at ease because I knew we were all in the same boat.”

Andrew Billingsley, a junior accounting major at CNU, took the new Accounting Concepts course as an elective. The course “allows non-accounting students to have hands-on practice with financial statements,” he said. “They can learn why accounting is important in the real world and since there are no journal entries in the class, majors outside the business school are happy to have an option other than the challenging ACCT 201 course. In my opinion, you need to enjoy accounting (just a little bit) to do well in this tough course because it goes into such extreme depth, it scares off non-business minded students.”

One such student noted that during class that she was always terrified of taking an accounting class because she is “not a numbers person.” But she enjoyed learning about accounting without triggering her math anxiety.

The accounting profession is concerned with a potential lack of supply of accountants entering the pipeline to become certified to serve the public. Offering a positive experience in early accounting education could encourage undecided students to consider studying accounting (or decided students to change their minds). As Samiha Khanna points out in her American Institute of CPAs (AICPA) article “Get Students Hooked on Accounting,” the introductory accounting course plays an important role in a student’s decision to pursue an accounting degree and career. Whether the course is being taught to business or non-business students, course content and delivery play an important role in attracting student to major in accounting.

A recruiting tool

Offering an introductory accounting course specifically designed for non-business majors may attract talent to the profession who otherwise would have chosen another path. The Pathways Commission report “Charting a National Strategy for the Next Generation of Accountants” makes seven recommendations to support the development of the future accountants Recommendation No. 5 centers on the development of an introductory accounting course to “improve the ability to attract high-potential, diverse entrants into the profession.”

While pursuing a degree in engineering, computers or information systems or declaring pre-med sound exciting, most first- and second-year students do not have the same passion for a degree in accounting. To attract high-quality students to the profession, the introductory accounting course needs to emphasize the utility of accounting to society as a whole. Instead of emphasizing debits and credits, a course enhancing the perception of the study of accounting may entice students interested in other “sexier” majors to give accounting a try instead. Of equal importance are the delivery methods the professor chooses. These high-quality students, originally not drawn to accounting, may favor more project-based learning and usage of technology.

As the Pathways Commission points out, “The first course in accounting is clearly a critical pathway to attracting students into the study of accounting and the accounting profession. Without a clear role and engaging learning approaches, this course may negatively influence students who are enrolled in a community college and seeking transfer to a four-year institution, enrolled in a business program but undecided as to their major, enrolled in a business program who have selected a major, and enrolled in a non-business curriculum who access the course as part of a minor or certificate.”

A look at JMU’s ACTG 244

Around seven years ago Dave Copley developed Actg 244, Accounting for Non-Business Majors, at JMU. The course caters to the accounting needs of five specific majors outside the School of Business, including health services administration, hospitality management and sports and recreation management. Dave developed problems and examples with the above majors in mind. For instance, he designed exercises related to Humana, a bed and breakfast and the Pittsburgh Pirates. While the course covers both managerial and financial accounting topics, he chose not to cover job order or process costing but heavily covers breakeven and cost volume profit analysis, as none of the five majors are involved in a manufacturing setting. From the financial accounting perspective, he focuses on installment loans but skips coverage of bonds, which are unlikely of interest to job entrants in the five industries to which the course caters. While originally only he taught the course, other faculty members have discovered that the course is fun to teach.

Looking ahead

While the target audience of the schools that offer a separate accounting class differs, there is agreement that the students benefit by having the class tailored to their major while removing the more technical aspect of accounting. Changing the content and the delivery method of these courses may also attract talent to the profession. Lastly, the content of the traditional introductory accounting course for business and specifically accounting majors cannot change much, but faculty may wish to reexamine delivery methods of the content to include the Pathways Commission’s recommendation of more project-based learning and increased usage of technology.

Gabriele Lingenfelter, CPA, MBA, teaches Principles of Accounting, Audit and Case Studies in Accounting at Christopher Newport University (CNU). She also serves on the VSCPA Board of Directors. 

Abby Brooks, CPA, MSA, teaches Accounting Concepts, Principles of Financial Accounting, Principles of Managerial Accounting and Intermediate Accounting 2 at CNU. Her research interests lie in innovative teaching techniques for both accountant and non-accountant students. 

1. Cynthia B. Lloyd. (2009) Teaching Elementary Accounting to Non-Accounting Majors. American Journal of Business Education, Volume 2, Number 2, pgs. 23-30.