Concepts

Understanding the concepts on which accounting practice is built

Although accounting regulators publish conceptual frameworks, we believe that students require a broader and more critical introduction to accounting. Our articles make no assumptions about prior knowledge and explain the practical and theoretical contexts of accounting concepts.

Students protesting with a banner "Planet over profit"

Students need to understand that accounting is political

You may not think that accounting is political or that accountants should meddle in economics and politics. After all, their job is to report objectively on the performance and condition of corporations. Faithful representation, as we know, requires neutrality. Corporations, however, are social inventions and financial reports are never passive…Read more

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More tips on teaching measurement

Accounting students are understandably keen to put numbers next to everything. But often our students don’t understand why and how numbers are attached to words in financial statements.  IFRS uses the term ‘measurement’ (rather than ‘valuation’) to describe the process of quantifying resources and obligations. Measurement allows us to describe…Read more

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Measurement

Accounting students are understandably keen to put numbers next to everything. But often our students don’t understand why and how numbers are attached to words in financial statements.  IFRS uses the term ‘measurement’ (rather than ‘valuation’) to describe the process of quantifying resources and obligations. Measurement allows us to describe…Read more

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Classification

When accounting students understand that classification of assets and liabilities is an important step towards deciding how to report events, then they appreciate the importance of professional judgement in accounting. Here are some tips for teaching classification.

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Accounting framework showing components of working capital

Working capital is widely misunderstood

Working capital is a widely used but often misunderstood term. To teach it well, the term needs careful scrutiny. The problem starts, as it usually does, with language. “Working” isn’t a helpful term. Working capital suggests that this capital works and the rest of it doesn’t. “Capital” is ambiguous and…Read more

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A pictorial presentation of a balance sheet showing assets of £50,000, liabilities of £30,000 and equity of £20,000.

The nature of equity

Of the five financial statement elements, equity is the most mercurial. In part, because it’s measured as the amount of recognised assets less the amount of recognised liabilities, expressed in this form of the accounting equation. Assets – Liabilities = Equity (net assets) Measuring total equity as a residual is…Read more

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Top 5 most confusing things about accounting

At Accounting Cafe we’re discussing how we help our students ❤️ accounting. Accounting terms that we take for granted are confusing for students. Thinking about this in your teaching can make their learning journey that much faster and easier. Here are my top 5 most confusing things about accounting: ⁉️…Read more

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Accounting Cafe

Teaching liabilities

Paul Jennings gives some useful tips and sequences for teaching liabilities. The elements of financial statements are the building blocks of financial statements.  If your students understand what the elements are then they will understand the basis for reporting events in financial statements. Those elements – assets, liabilities, equity, income…Read more

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Accounting Cafe

The nature of income

Dictionaries, from an accounting perspective, invariably provide an incorrect and conflated definition of income.

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Accounting Cafe

The nature of assets

The elements of financial statements are the building blocks of financial statements. If your students understand what the elements are then they have a good basis for understanding how events are reported in financial statements. Those elements – assets, liabilities, equity, income and expenses – are key to understanding financial…Read more

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Accounting Cafe

Concept maps in Accounting Education

Presentation by Toby York TACTYC Virtual Annual Conference on 15 May 2021 1. Background paper My presentation is based on a draft paper The benefits of concept mapping in accounting education [PDF] which is in three parts. Part one: identifies some common problems with current accounting education practices, drawn mostly…Read more

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Accounting Cafe

Goodwill explained in three words

Goodwill represents those ‘unidentified flying assets’ that can’t be individually identified. Goodwill is one of those slippery concepts that accounting students can find confusing.  Accounting for goodwill brings the student in front of a number of difficult questions and misconceptions in accounting, such as the nature of an asset and…Read more

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Accounting Cafe

Games & simulations in accounting and finance education (GSAFE)

Aston Business School’s virtual conference takes place on 20 April 2021 The GSAFE virtual conference explores games, simulations and playful learning in accounting and finance education. The themes cover pedagogical techniques in learning, teaching practice and research. Plenary presentations: Professor Jordi Carenys (EADA Business School) Matt Davies (Aston University) Susan…Read more

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Assets are rights

With gratitude to Paul Jennings for this clever idea. Some students find it difficult to appreciate that assets are rights, not things in and of themselves. I used to tell students that in the old days we put motor vehicles on balance sheets but they kept falling off. It didn’t…Read more

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A concept map showing the five finacial statement elements and their relationships to each other

Why concept mapping is important

A version of this article was first published on LinkedIn on 30 July 2020. Concept maps are visual representations of information that show everything in a single view. They help students to create a clear mental model, which clarifies their thoughts and provides a shared language of understanding in a…Read more

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