There’s been so much chatter about this over the years. Universities only teach theory blah blah blah….
Well here’s some evidence. A couple of well known accounting firms have used a double entry accounting test on their graduates who start in 2019.
The results might surprise you!
Of those tested only 51% had a strong intuitive grasp of double entry accounting (i.e. Dr’s and Cr’s).
The test gave straight forward transaction scenarios and asked candidates to determine the appropriate journal entry, gave them journal entries and asked them what transaction was happening, and quizzed them on whether certain ledger accounts would likely be debits or credits. Simple stuff really?
Whether you’re going to work in private client (BAS), audit or even tax, it’s important to “think in double entry”. If you are confused by a debit entry you see in a client accounting system, but don’t automatically think “what is the credit to that”, or, worse, can’t even work out whether it is a debit or a credit, then it’s going to be pretty tough it fix it or audit it!
The firms who know which new starters have or have not got this basic accounting ability tell us it will help them speed up the induction process.