Managerial First: Reversing the Sequence of Introductory Accounting Courses

Article excerpt


As accounting programs have grown and developed over the past 75 years, they have gradually adopted a very consistent curriculum model for the introductory courses. In this curriculum model, the financial accounting topics invariably precede the managerial accounting topics. In recent years, a number of forces have caused accounting educators to reconsider many of their assumptions about curriculum and its implementation.

The Bedford Committee (AAA, 1986) and the Accounting Education Change Commission (AECC, 1990) have, for example, been the stimuli for many interesting innovations in accounting education in the past decade. Solomon and DeBerg (1994) have recently supervised the development of a new core competencies model for accounting programs in the State of California. Increasingly, accounting educators are trying new ways to help their students develop critical thinking skills (Doney, et al., 1993; Kimmel, 1995), learn how to learn (Bartholome, 1991; Basu and Cohen, 1994; Geary and Rooney, 1993), learn better in challenging environments (Baldwin, 1993), and deal with technical information overload in accounting courses (Anderson and Boynton, 1992).

The increasing prevalence of outcomes assessment (Herring and Izard, 1992) at many universities is motivating accounting educators to specify desired skill sets more clearly and identify ways to measure student mastery of those skills more accurately. The accounting profession has not been silent about the skills it desires in its new hires. Even the accounting professionals in industry have funded a major study that purports to tell educators what they want to see in the accounting graduates they hire (Siegel and Sorenson, 1994).

These pressures on accounting educators have led to much experimentation and many new ideas. Somewhat surprisingly, experiments that alter the traditional sequencing of introductory course content has been rare.


Ainsworth (1994) and Ainsworth and Plumlee (1993) report the results of an AECC innovation project at Kansas State University. In this curriculum revision, the first introductory course covered how one might use accounting information in making operational decisions. The second course focused on financing and investing decisions. In the first course, therefore, the revised Kansas State curriculum integrated many managerial accounting topics.

Suadagaran (1996) included some managerial topics in a revision of the first introductory course. That revision yielded a first course in which he tried to destroy students assumption that bookkeeping and accounting were synonymous. He accomplished this objective, in part, by including managerial accounting topics which students found to be more interesting and analytical than financial accounting topics in the first course.

Most AECC-sponsored and other curriculum innovations (e.g., Pincus, 1995; Solomon and DeBerg, 1994) have retained the traditional ordering of financial topics first, managerial topics second. One drawback to using blended approaches such as those used by Ainsworth and Plumlee (1993) and Suadagaran (1996) is that book publishers create materials for the more traditional financial/managerial split. Therefore, an instructor using a mixed approach would need to cobble materials together from disparate sources.

Often, faculty that are willing to teach a financial principles introductory course feel ill-prepared to teach managerial topics. The opposite is often true for faculty that feel their teaching strength is in cost and managerial accounting. In many schools, the introductory courses are staffed by adjunct faculty or doctoral students, which can make such course customization extremely difficult.


We believe that a logical argument can be made for introducing student to accounting using predominantly managerial topics. Managers at all levels of organizations use managerial accounting knowledge more frequently than financial accounting knowledge. Ainsworth and Plumlee (1993) argue that an ideal sequence of course topics should begin with easier material that students can master with fewer skills and progress to more difficult material.

We believe that students in introductory courses understand managerial accounting more easily and find it to be more interesting than financial accounting. Beginning the sequence with financial accounting ignores this possibility. The present sequencing of introductory course topics was developed to accommodate the demands of the professional certification examinations for which accounting majors must prepare. Many more introductory accounting students are not accounting majors than are accounting majors.


Business schools train their non-accounting majors for careers in management of corporations, government, and not-for-profit organizations. Other than those that choose to be finance majors, most of these students will have careers in which they will use managerial accounting information and the skills taught in traditional managerial accounting courses much more than anything they learn in financial accounting.

All managers are concerned with the pricing of products, the costing of activities, budgeting, and forecasting profitability. Managers actually make buy vs. lease decisions and live or die by the numbers in their responsibility accounting systems. Far more managers will be involved in a transfer pricing issue than will ever be required to calculate accelerated depreciation. Therefore, managerial accounting presents these students with vital knowledge that they can see they will need as they work on the course assignments.


A number of non-business majors take an introductory accounting course. Many of these students only take one accounting course, so the need for a careful choice is even more important than for non-accounting business majors, who generally take two introductory accounting courses. The non-business majors that might take an accounting course include students majoring in: engineering, pre-med, pre-law, nursing, education, and a variety of liberal arts and science subjects.

All of these students have some interest in gaining a basic understanding of how businesses operate. When these students take a course in financial accounting, they find the same mind-numbing and confusing double-entry bookkeeping details that bore the business majors to tears. Engineering students are far more interested in cost estimation and budgeting issues than they are in learning about debits and credits. Students heading for health care or education careers will find their lives ruled by activity measurements, cost allocations, and budgets to a far greater extent than by the correct amortization of discount on a bond.


Increasingly, accountants are being asked to become business advisors in addition to fulfilling their traditional number-crunching roles (Borthick, 1992; Elliot, 1994; McKinnon and Bruns, 1992). Public accounting firms expect their audit staff members to be vigilant in looking for ways to help clients improve their operations and identifying ways in which the firm may provide audit clients with additional consulting services. Auditors with a firm grasp of managerial accounting principles will be better able to excel at this valued function.

An increasing number of accounting graduates do not enter public accounting and many of those that do enter public accounting ultimately take jobs in managerial accounting areas. Arguably, a solid base of managerial accounting is at least as good for most accountants as a base of financial accounting and it may be markedly better for most. Most accounting programs even the 150-hour programs require students to take twice as much financial accounting as managerial accounting. Giving these students a good start in managerial accounting principles might be a good way to help equalize some of that imbalance.


Cohen and Hanno (1993) found that one important factor that students use to decide whether to become accounting majors is how well they performed in their introductory courses. The first accounting course is often the first business course of any kind that sophomores take. When this course includes financial accounting topics, topics that lend themselves to dry, mechanistic methods of dissemination, we may be losing bright, creative, potential accounting majors. Adams, et al., (1994); Cohen and Hanno (1993); and Saudagaran (1996) all report findings that brighter students were turned off by the highly-structured mechanical bookkeeping details of introductory financial accounting courses.


In this paper, we have presented arguments for reversing the sequence of the introductory financial and managerial accounting courses that are typically taught in U.S. and Canadian accounting programs. We briefly reviewed two reports of topic order revision in introductory courses, however, these program revisions each integrated topics from managerial and financial accounting into both courses. We explained the logic of our arguments and discussed the potential advantages of reversing the order of the topics in the two introductory courses for non-accounting business majors, for non-business majors, and for accounting majors. We noted an advantage to accounting programs an improved ability to recruit the best and brightest students from the introductory courses into the accounting major.

In concluding, we note that the potential advantages we outlined for students would also inure to the benefit of other stakeholders that have an interest in accounting curricula. For example, employers of these students would reap the benefits of having new employees that see the value of accounting as a true business tool. We also believe that a complete reversal of course order may be more effective than selectively exchanging topics between courses because of the textbooks, established pedagogies, and instructional materials available from publishers that support an integrated presentation each financial and managerial component of introductory accounting.

Yet another alternative to the traditional sequencing of financial accounting first would be to have students take both courses in the same term. Such an alternative would provide significant benefits to both accounting majors and the accounting faculty. Accounting majors could move on to upper-division courses in half the time presently required this can be a serious issue for students transferring from community college programs or for those switching majors during their sophomore year. The accounting faculty would benefit from the balanced workload. Since many faculty consider themselves to be either financial or managerial specialists and prefer to teach only in their specialty, this alternative would permit stable year-round staffing loads in each area. Adjunct faculty and doctoral students would also benefit from having one preparation throughout the academic year. Non-accounting majors that are only required to take one course might be permitted to select either the financial or the managerial course to tailor the curriculum to their specific needs. This idea is certainly worthy of further study.


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Gary P. Schneider, University of San Diego

Carol M. Bruton, University of San Diego

Jeffrey W. Arricale, KPMG Peat Marwick, LLP


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