1.4 So, Why Should I Study Accounting?

You may still be asking, “But why do I need to study accounting?” Even if you have no desire to be an accountant, at some point in your life you will need financial information to make certain decisions, such as whether to buy or lease an automobile, how to budget your monthly income, where to invest your savings, or how to finance your (or your child’s) college education. You can make each of these decisions without using financial information and then hope everything turns out okay, but that would be bad decision making. As noted in the discussion of Figure 1.2, a good decision does not guarantee a good outcome, but a bad decision guarantees one of two things—a bad outcome or a lucky outcome. And you cannot count on lucky outcomes time after time. On a personal level, each of us needs to understand how to collect and use accounting information.

Odds are that each of you will have the responsibility of providing some form of income for yourself and your family. Would you prefer to work for a company that is doing well and has a promising future or one that is on the brink of bankruptcy? Of course we all want to work for companies that are doing well. But how would you know? Accounting information will allow you to evaluate your employer’s short- and long-term potential.

When you graduate and secure employment, it is almost certain that accounting information will play some role in your job. Whether your responsibilities include sales (where you will need information about product availability and costs), production (where you will need information regarding the costs of materials, labor, and overhead), quality control (where you will need information relating to variances between expected and actual production), or human resources (where you will need information relating to the costs of employees), you will use accounting information. The more you know about where accounting information comes from, how it is accumulated, and how it is best used, the better you will be able to perform your job.

Everyone is affected by accounting information. Saying you don’t need to know accounting doesn’t change the fact that you are affected by accounting information. Ignoring the value of that information simply puts you at a disadvantage. Those who recognize the value of accounting information and learn how to use it to make better decisions will have a competitive advantage over those who don’t. It’s as simple as that.

Step one in succeeding in an accounting class is to stay current with your studies and with your assignments. Many of the concepts in accounting will be new to you, and some time is required between the introduction of a new concept and the mastery of that concept. Some students try to “cram” all their accounting study into a short period of time right before an exam, and they almost always find, through sad experience, that the cramming strategy doesn’t work in accounting.

Second, don’t be too concerned with all the new and unfamiliar terms you see in the first topics of the book. Learning a “new language” takes time. Be patient. Before too long, you will be speaking the “language of business” (accounting) quite fluently.

Third, realize that many of the concepts in accounting build on one another. As a result, missing class or skipping a couple of homework assignments can be catastrophic. An initial concept must be understood before a subsequent concept can be attempted. For example, imagine trying to learn to do algebra after having skipped the lessons on addition and subtraction. Similarly, jumping into Topic 6 in this book is a difficult feat if you don’t understand the material covered in Topic 3.

The fourth step in having a good experience in your accounting class is to make sure you understand the big picture. We have included learning objectives to cover each major point in the topic. The introductions associated with each learning objective should help you understand WHY you are studying the issue in addition to HOW to do accounting. In most cases, when you understand the “why” of something, you find it much easier to grasp the “how.”

Finally, if you need help, don’t delay in finding it. Your instructor is a valuable resource, and you should take advantage of his or her office hours. In addition, many students find that accounting study groups are beneficial. A well-organized study group is an example of the classic economic concept of specialization and trade; group members can rotate in taking the lead in studying difficult concepts and then explaining them to the rest of the group.

Good luck, and enjoy the ride!

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