The 5 Hardest Accounting Subjects in College
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The 5 Hardest Accounting Subjects in College

Bachelor of Science in Accountancy is one of the most difficult courses to pass in college. The course primarily deals with numbers and computations. Problems are encountered in almost about every accounting subject. Of all the subjects that a student must undergo in the accountancy program, five of the hardest accounting subjects were determined. Provided in this article are the accounting subjects that students have difficulty with and the topics associated with each subject.

The 5 Hardest Accounting Subjects in College

Accountancy is a profession that plays a vital role in in the economy and society. With the business world evolving rapidly, the accountancy profession has become important more than ever. Finishing the accountancy course is a very difficult task. Students would undertake various accounting subjects and after which, a board exam should be taken in order to become a Certified Public Accountant.

Accounting students encounter a lot of challenges with regards to their accounting subjects. Presented below are the 5 hardest accounting subjects taken up in college:

5. Financial Accounting and Reporting II – This subject is a continuation of Financial Accounting and Reporting I. Whereas part I focused mainly on assets, part II would focus mainly in liabilities and shareholders’ equity. Students find this subject difficult mainly because of the following topics:

  • Noncurrent liabilities – this topic rattles students who do not appreciate interest and amortization computations. Specific subtopics that students find difficulty with are: accounting for bonds payable, accounting for long-term notes payable and debt restructuring.
  • Leases – students complain about the different accounting procedures for the different types of lease namely: Operating lease, Finance Lease and Sale and Leaseback. The fact that the lessor and lessee points of view are taken into consideration further confuses the students.
  • Accounting for Employee Benefits – this topic introduces students to computations involved in determining benefits of employees. The computations revolve around short term employee benefits, post-employment benefits, termination benefits, equity compensation benefits, and pre-retirement compensation plans.

4. Managerial Accounting II – This is the second part of Management Accounting and it deals with the application of methods and concepts focusing on segment reporting, profitability analysis, and decentralization; information for decision-making purposes (short-term and long-term) and non-financial indicators such as productivity per employee or per service unit; decision making affecting short-run operations of the company; capital budgeting decisions; pricing of goods and services; and environmental cost accounting.

Preliminary topics are easy, like identifying relevant costs and understanding the decision making process. Students generally enjoy discussions about make or buy decisions, sell or process further, special pricing decisions, and continue or discontinue operations.

Problems arise during the middle to late topics. Students generally have problems when it comes to discussions about the following:

  • Capital Budgeting Decisions – This topic involve computations of Payback period, Bail-out period, Accounting Rate of Return (ARR), Internal Rate of Return (IRR), Discounted Cash Flow Techniques (Net Present Value, Discounted Rate of Return, Payback Reciprocal, Profitability Index, Discounted Payback period)
  • Segment Reporting and Profitability Analysis – Topics discussed revolve around levels of segmented statements, sales and contribution margin, traceable and common fixed costs, segment margin, segmented financial information on external Reports, hindrances to proper cost management, controlling the rate of return, residual income, and TQM.
  • Environmental Cost Management – this topic is quite new and it gives problems to students and professors alike. The topics include measuring environmental cost, assigning environmental cost, life-cycle cost assessment, strategic based environmental cost, and responsibility accounting.

Students primarily find this subject difficult because of the fact that it covers a wide range of topics.

3. Applied Auditing (Auditing Problems) – This is a culmination of what students learned in Financial Accounting and Reporting part I and II. This subject deals with the application of audit principles, standards, techniques and procedures in evaluating an entity’s financial statements. Topics that give students problems are as follows:

  • Audit of the revenue and collection cycle – this includes test of sales, receivables and cash transactions.
  • Audit of the expenditure cycle – this includes audit of cash disbursements, payroll transactions, production transactions, and inventory warehousing.
  • Audit of the financing and investing cycle – this includes audit of acquisition of funds and other assets, and investment of cash and other assets.

This subject emulates the actual audit of financial statements thus making it difficult for the students.

2. Cost Accounting and Cost Management – this course is designed to orient the students to the cost accounting and cost management framework of business. This subject is mainly related to management accounting but it takes a more in-depth look at the different costs of a business. Students are greatly confused with this subject because of the numerous methods presented in accounting for different types of costs. The following topics generally give students a lot of problems:

  • Materials costing and control – the subtopics are: Costing based on physical flow; Traditional control procedures (Order cycling, Min-max, Two-bin, Automatic order, ABC) and Alternative stock/inventory management systems like EOQ, JIT and Back flush costing.
  • Overhead costing and control – computations with regards to allocation of service department cost and separation of fixed and variable costs sometimes confuse students.
  • Costing methods – students find it hard to follow computations with regards to job order costing, process costing, batch and contract costing, and operation or service costing methods.
  • Joint and by-product costing – discussions revolve around joint costs and joint products and how to account for scraps and by-products
  • Standard costing – the highlight of this topic is the variance analysis regarding materials, labor and overhead.

1. Advanced Financial Accounting and Reporting II – this is the most dreaded subject of accounting students. It is a continuation of the subject Advanced Financial Accounting and Reporting I. All of the topics of this subject are hard due to the ever changing amendments in the standards included in the subject matter, and the outrageously long problems that the students need to solve. The topics included in Advanced accounting II are:

  • Accounting for Business Combinations – Discussed here are the methods involved in business combinations (mainly purchase method), stock distribution and allocation of single and two classes of stock, and preparation of financial statements after business combination.
  • Consolidated Financial Statements – Subtopics include preparation of the statement of financial position at the date of acquisition using the purchase method, preparation of consolidated financial statements after the date of acquisition using the cost and equity methods, determination of equity in subsidiary income, minority interest, investment balance, minority interest net income and consolidated net income.
  • Accounting for Foreign Currency Transactions and Foreign Currency Translations – This topic will include journal entries showing gain or loss on exchange difference, translation methods and translation adjustment treatments.
  • Accounting for Financially Distressed Corporations – this topic involves quasi reorganization, troubled debt restructuring, preparation of statement of affairs with deficiency statement, trusteeship operations, and preparation of statement of realization and liquidation using both the conventional and alternative format.

These five subjects have given students numerous problems time and time again. These problems arise due to the sheer amount of concepts and principles that are thrown at the student. Also adding to the concerns of the students are the frequent amendments to the standards which could modify or completely change the way a problem is solved.

These five accounting subjects are the subjects that most students fail. These are the subjects that both students and professors need to focus on much more.

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Comments (6)

I remember only to well the problems I had with accounting and the ones you mention here are the ones that gave me the most problems.

Useful information on accounting. Really hard. Thank you Lindbergh. Voted. I remember cost accounting...this brings back memories. Accounting was not my major but I did take a few accounting classes, being a business major.  It's good to give those interested in this field a heads up.  Good job here!

Wow, thanks guys :)

Accounting was my worst subject in college, it was a requirement for my degree and I had to take it.  Great article.

Thanks for the information. I'm glad I never had to take this course! : P