March 22 2020

Is Accounting Math-Heavy?

As accounting and math is all about numbers, a common perception is that you need to be very good at math to learn accounting. Well it’s not all true. For many just the word "Math" is enough to scare about accounting. This is very discouraging.

The fact of the matter is that if you know the basics of math like addition, subtraction, multiplication, division and bit of algebra, it's enough for you to learn accounting. Accounting is a language, and the numbers simply quantify certain concept which is normally arrived at by performing a simple arithmetic sum. Understanding of accounting terms like net asset value, gross profit margin, current ratio, prepaid expenses, post paid expenses, current liabilities, non-current liabilities which have a specific meaning is an absolute necessary.

If accounting is the language of business then mathematics is the language of accounting. At different stages of accounting addition, subtraction, multiplication, and division of arithmetic are applied. Accounting is not math-heavy, does not require much math just the working knowledge will do, but demands careful and logical thinking. As an accountant you will ultimately solve a problem, and accounting requires you to first analyse transactions before recording them. This initial analysis of transactions will give the correct value to use in an accounting practice. You will need to acquaint yourself with direct and indirect expenses, direct and indirect incomes, amount payable and receivable, pre-paid and post-paid expenses, fixed and current assets, liabilities and assets etc.; and where they fit into the financial statements.

Basically 'accounting' as a subject consists of three key elements:

  1. Accounting Theory (the underlying concepts),
  2. Accounting Principles (the rules for applying the concepts) and
  3. The Accounting Procedures (implementation of the accounting rules)

Becoming accounting literate involves mastering the accounting language. The numbers simply quantify the language.