Financial Accounting & Threshold
Concepts: Ignoring Articulation in Favor
of the Bottom Line
Kim Lyons UW-La Crosse
Special thanks to OPID and the
UW-La Crosse Provost’s office for
their support of this project
“A threshold concept can be considered as akin to a
portal, opening up a new and previously
inaccessible way of thinking about something. It
represents a transformed way of understanding, or
interpreting, or viewing something without which
the learner cannot progress.”
Meyer, J. & Land, R. (2006). Overcoming Barriers to Student Understanding: Threshold
Concepts and Troublesome Knowledge. New York: Routledge.
Threshold Concepts
Moving from
• Memorized rules, content, and processes
To
• Understanding the interrelatedness and impact of
reporting alternatives
The Greater Threshold for
Accounting Students
In the first few weeks of an Accounting Principles I course
students learn
• The accounting equation and components of financial
statements
• Financial statements are connected or “articulated”
• Key figures in one financial statement are affected by
changes in another
• Financial information should be viewed in relative terms
Basic Model: Articulation
As students move through the financial accounting course
sequence, are they better able to
• Identify the accounting equation
• Identify as true a conceptual description of the accounting
equation
• Apply the threshold concept by recognizing changes in
income relative to the accounting equation
Research Questions
Using 5 multiple choice questions, I asked a cross-section
of Principles I (N = 106), Intermediate I (N = 44), and Advanced
(N = 44) Financial Accounting students to:
• (1) Identify the accounting equation
• (2) Identify a conceptual description of the accounting
equation as a true statement among alternatives
• (3-5) Apply the threshold concept to choose between two
companies for investment
• (3-5) Explain the reasoning behind their investment choices
Research Design
• Improved ability to identify, describe, and apply the
model at higher levels of the financial course sequence
• Smaller numbers of students in higher level courses
making less optimal choices for the same reasons as
students in lower level courses
What I Expected
Concept questions included the following
Question Design
Question Design
Application questions were constructed to include an
optimal answer choice when the data was viewed in context
Open-ended explanations were coded to reveal thought
processes separately from answer choices
• (0) Unrelated reasoning
• (1) Application of the threshold concept
• (2) Focused or narrow thinking
(net income, assets, liabilities, equity, company size, or cash)
Question Design
Statistical analysis revealed
• Ability to apply the model at higher levels of the financial
course sequence improved
• Making the optimal choice was not independent of
reasoning on all three questions for all three groups
• Students who exhibited poor reasoning were clustered
into groups, but not as expected
Analysis and Results
Principles students focus on net income and assets
Intermediate students focus on debt
Significant Differences in Reasoning
Principles I to Intermediate
Intermediate students focus on equity and company size
Advanced students focus on debt
Significant Differences in Reasoning
Intermediate to Advanced
Question 1: Correctly identify the
accounting equation
ACC221 (N = 106)
96%
Question 2: Conceptual
description of the accounting
equation
ACC321 (N = 44)
95%
ACC221 (N = 106)
9%
ACC421 (N = 44)
95%
ACC321 (N = 44)
57%
ACC421 (N = 44)
57%
• Advanced students were no more likely than intermediate students to
identify the conceptual description
• These results imply that students at higher levels are applying concepts more
appropriately, even while they may not understand the model they are using
• The conceptual definition is counterintuitive or confusing
Conceptual Questions