Language

Accounting uses common language in specific and uncommon ways

Many students unfamiliar with accounting believe they need good numeracy skills. This is true, but they also need good language skills.

Knowledge domains such as science and technology use specialised words and language to describe phenomena. Students learn to use this language in the context of its domain.

Accounting does not. Accounting language uses common words in specific and uncommon ways, which is a cause of confusion and difficulty for students. Consider these examples:

  • Equity is not valuable
  • Income is not cash received (and doesn’t come in)
  • Prepaid expenses are not expenses
  • Deferred revenue is not revenue
  • Expenses are not the same as expenditure

Accounting Cafe takes the language issue seriously and never assumes a prior understanding of words and terms. To provide a clearer understanding for students, we challenge the terms and definitions provided by regulators and textbooks.

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Let’s be clear. Nobody learns the fundamentals of accounting by using DEAD CLIC. Mnemonics may have their place, but this isn’t one to keep. Let’s kill it off. A friend told me that when she was learning accounting, she dared to ask, “Why do debits increase both expenses and assets?”…Read more

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