How Much Math? (scroll down for a basic math quiz)
The good news is that not a lot of math is needed to study accounting. A working knowledge of arithmetic and a small amount of basic algebra will allow a student to successfully complete any introductory accounting courses, which are described below. The reason for this is that although accounting information consists of numerical data, the math tools used to record the numerical data are very simple, really just addition and subtraction. The reason that you need to know a little more math than this (see below) is that doing accounting requires first analyzing transactions before recording them. It is the initial analysis of transactions to determine correct amounts to record that requires the basic math skills that you see below. Only at very advanced professional levels would you need more math than this.
So why does introductory accounting seem challenging (and a lot of work)? There are two reasons, and they are not about math. First, you are simply learning a lot of ideas, rules, and procedures that are specific to accounting and that are new to you. Secondly, although accounting doesn’t require much math, it does require thinking that is careful and logical (remember “word problems?”). In this sense, accounting has some similarity to math and this is probably why taking math classes helps with accounting classes. However this kind of careful thinking can definitely be learned with practice in accounting classes, without ever having to become some kind of expert math student.
The Math You Need
Here is a summary table of the kind of math that will take you through a year of introductory accounting and a year of intermediate accounting and most other accounting courses as well.
|Whole number operations
|Adding, subtracting, multiplying, and dividing numbers like 75, 230, 12, etc.
|Decimals operations and rounding
|Expressing amounts as decimals and adding, subtracting, multiplying, and dividing numbers like 75.3, 2.798, 12.61, .75, .05 etc. rounding amounts to a designated decimal amount.
|Percentage operations and conversion
|Expressing amounts as percentages and adding, subtracting, multiplying, and dividing numbers like 20%, 7%, .07%, 150%, etc.
|Expressing amounts as fractions and adding, subtracting, multiplying, and dividing numbers like 1/3, 15/100, 12/8, 1/10, etc.
|Converting numbers expressed in one form to a different form
|Converting any decimal, percentage, or fraction into another format, such as converting 30% into a decimal or fraction or converting 6/8 into a decimal or percentage.
|Positive and negative numbers
|Adding, subtracting, multiplying, and dividing numbers that are positive and negative.
|Ratios and averages
|Be able to express numerical relationships as ratios and averages.
|Be able to create and/or solve a basic algebraic expression such 3x = y + z/8.
|Order of operations
|For an expression that contains several operations, know the order to calculate the answer, such as for [8/2 + 3/5]².
|Understand the essential calculations with exponents.
What If I Can’t Do the Math? Where Do I Get Help?
Ok, maybe you don't remember or never really learned how to do some of this stuff and you thought it was hard when you were a kid. Maybe as a kid you even decided that you were going to hate math. But here's some good news: the above content is much easier as an adult! Why? Primarily because you are more motivated, more mature and experienced, know how to study and ask questions, and because as an adult you won't tolerate lazy or confusing math teachers. You have many good options. They are: 1) Take a basic math class that contains the above topics. One class should be enough. (Note: “Business Math” is a math class that applies the above topics to common business situations. These classes are useful, but probably best to take after you have completed a basic math class if you want additional review.) 2) Use a math tutor or math lab at school. 3) Do your own math review for only what you need. There are many good basic math books available. Just be sure that they contain lots of examples and problems with complete and detailed solutions.
Note: Worthy and James provides a complete, step-by-step, very low-cost basic math review that you can see and download from this site.
Introductory Accounting Courses
The subject of “accounting” consists of three key elements: accounting theory (underlying concepts), principles (rules) for how to apply the concepts, and the specific procedures that implement the rules. The type of introductory class that you take will determine which of these elements receives the most emphasis. For example, bookkeeping classes emphasize procedures, particularly for recording and organizing financial data. Accounting principles classes or basic accounting classes usually provide a more balanced content that includes all three elements. These classes provide a less specialized, broader understanding and the opportunity for some study of financial statements and the use of accounting information. Introductory financial accounting concentrates more on theory and principles and the preparation and use of financial statements. For any particular class, you can get a good idea of its content emphasis by reading the school catalog, contacting the instructor, and looking at the course textbook in the bookstore.
What If I Want To Major in Accounting?
Very little changes even if you are an accounting major! However, you will need to successfully complete a business statistics class as well as being sure that you are comfortable with basic algebra. (Both basic statistics and basic algebra are pretty important as you continue on in business subjects.) Some schools may require more advanced topics such as linear programming or calculus for accounting majors. However you will never, ever, need this kind of more advanced math in accounting. The courses are really just used as screening devices and to add status to a program. You just have to put up with them or find a different program.