About six years ago, some colleagues and I at Seton Hall got to schmoozing about the first accounting course. It’s a bear to teach, and, we figured, students don’t get much out of it. For one thing, an average of only 13% of the students taking the course become accounting majors. Yet the first thing we try to teach them is: how to do bookkeeping, debits and credits, journal entries, general ledgers, etc. etc. etc. Then, we cover various details about how to do accounting in exhaustive detail: three depreciation methods, three inventory methods, and lots of other stuff that the students can just as well forget as they drive home from taking the final exam.
We asked ourselves: what should students learn in a first accounting course? After much discussion, we arrived at three basic learning goals for the first course:
- Students can understand the basic elements of the financial statements in an annual report.
- Students can analyze financial statements for profitability, liquidity, solvency and productivity.
- Students can work within the debit-credit system to prepare journal entries and basic financial statements.
From here, we completely redesigned our first course. We had trouble finding relevant materials. We decided not to use any of the “user-method texts” because they did not sufficiently cover financial statement analysis and the debit-credit system. Our faculty eventually chose the now out-of-print textbook by Werner and Jones to be supplemented with Karen Schoenebeck’s Interpreting and Analyzing Financial Statements, 4th edition. We invited Prof. Schoenebeck to come to campus to explain the text, and then hired her as a visiting professor to help implement the new course.
As we designed the course, we implemented three more signature features:
- Most coursework follows an activity-based format, based on Prof. Schoenebeck’s book. Students learn by doing.
- Salient use of real financial statements of real companies. No “XYZ Companies” selling “widgets.”
- A semester-long project requires every student to analyze a real company’s financial statements. This project includes spreadsheets, a written report, and a presentation.
- A common syllabus and common exams agreed to by all faculty teaching the course each semester.
Formal feedback indicates that students liked the newly redesigned course and faculty enjoyed teaching it.
When Prof. Schoenebeck’s book was ready for its next edition, she and I decided to rework the book so that it would incorporate the strengths of our new course design. This became the 5th edition of the book, where I was added as a co-author. Sales of the book increased as other schools began to follow our little experiment.
We wrote a research paper about the course, and presented it at American Accounting Association’s National Meeting in New York City, 2009, describing the features of our redesign and student response to it.
Now I’m very excited to announce that the 6th edition of the book is out. It includes many updates from the 5th edition, and incorporates even more innovations that we have developed and heard about from some of our colleagues at other schools. We are very proud of it.
Take a look. If you teach accounting at a college or university, e-mail me and I will arrange to have our publisher, Pearson Prentice-Hall, send you a free review copy.