When you are just starting out with accounting concepts, they may feel like a foreign language. To some people, accounting concepts come easy, but to others, it can really be a struggle. Coming from a person who’s been there, some of the steps on how to understand accounting concepts will be useful to anyone, studying accounting and business owners as well. Let’s take a look at how to understand accounting concepts, so they stick!
Studying Accounting Concepts in the Correct Order
The first thing to know when studying accounting concepts is the order in which you study them. There’s no point in jumping into the deep end of a pool unless you know how to swim. The same goes for accounting.
For most people, starting at a beginner level of accounting, and with the most basic concepts, makes sense. This would be the basic accounting equation, moving the debits and credits, and progressing to T accounts.
It really makes sense to study in this order and digest the basics before even thinking about going onto complex topics like tax or audit. Think of understanding accounting concepts like building a house. You need to lay the foundation first and build up from there.
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Setting Realistic Expectations
While a lot of people want to learn, accounting concepts on their own, to improve their business and make investments, it’s not an overnight process. It’s more of a journey.
Why are you certainly can study accounting on your own, setting, realistic expectations, on understanding, the concepts is necessary. The very basic level accounting courses in college are usually a full semester long. If you plan to study on your own, then figure, it will take at least this long, if not longer if you aren’t as dedicated.
The Best Methods to Understand Accounting Concepts
When it comes to some of the best methods for understanding accounting concepts, practice can’t be overstated. Some will eventually come when you apply it on the job but during your studies, you need to be working through problems and applying accounting concepts. This could be working on the matching principle or classifying balance sheet and income statement items correctly.
As you practice accounting concepts, you will get to a point where you hit a roadblock. There are two ways to approach it so the information sinks in. Getting help and research. Generally, you should do the latter first.
Researching Accounting Concepts
Before getting help trying to understand an accounting concept, try to learn it yourself. If you are following along in a book, reread the chapter. If you are learning by watching a video, rewind and take notes.
Some of you learners will go into public accounting after college. One area you’ll want to work on before going into public accounting is your research skills. You’ll need to be able to look up accounting concepts, check your work and propose ideas to seniors or managers higher than you. Before getting help, most people want to know if you tried to research it yourself and exhausted your resources. At that point, if you still don’t have the answer then it is time to ask for help.
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Getting Help with Accounting Concepts
Sometimes when you are trying to understand accounting concepts, it is inevitable that you’ll need to ask for help. It’s easy if you have a teacher or classmates but if you are self-studying accounting then don’t be afraid to get a tutor. Bouncing a quick question off another accountant or even posting in a forum can help you mentally understand trickier accounting concepts.
Industry Papers: How to Use Them
An often overlooked resource to understanding accounting concepts is accounting industry papers. Typically you will see these come out by CPAs when there is a new change in the regulations or standards.
Reading an industry paper or white paper can give you that extra background you need to implement accounting standards. Think of it as one of the many tools in your toolbox.
Final Thoughts on How to Understand Accounting Concepts
It’s not uncommon for new learners to struggle a bit with understanding accounting concepts. You are going to have to put in the time, study, ask questions and practice. Not only will it help your career but you’ll be set to run your own business if you understand the accounting behind it!
