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Accounting and finance certifications

In accounting and finance you learn the accounting equation, the debit and credit rule, ratios and standards by heart. Lumi asks them back until you can post an entry without hesitating.

How to turn this subject into cards

Make one card per type of entry, with the accounts debited and credited, and one card per ratio with its formula and what it measures. For standards, one card per principle with a concrete case. The trap is reading a solved example, finding everything obvious, then getting debit and credit the wrong way round on exam day. With Lumi you post the entry from memory before seeing the solution, which fixes the direction far better than rereading (Roediger and Karpicke, 2006). Also redo each entry in reverse, from the result back to the transaction, to check that you understood it. Repeat the entries on different days, in short runs, and watch the signs of debit and credit (Cepeda et al., 2006).

What you need to know by heart

  • The accounting equation and the structure of the balance sheet and income statement.
  • The debit and credit rule, with standard entries.
  • Liquidity, profitability and gearing ratios, with their formulas.
  • The principles of IFRS and of local frameworks.
  • The outline of your exam, CPA, ACCA, CFA or a national diploma, as published by the body.

It depends on the country

The frameworks change by country. Many countries follow IFRS, while the United States uses US GAAP and France keeps its plan comptable général for statutory accounts. Each certification has its own body, the CPA in the United States, the ACCA and the CFA internationally. The format and pass marks of each exam are published by the body, so always start from its official syllabus.

How Lumi helps you remember it

You teach your cards to Lumi, equation, entries, ratios, standards. It forgets over time, like you do, then quizzes you right before you would forget. As the exam approaches, the Mist settles over what you know less well, such as ratios or one particular standard, and Lumi asks that first. You arrive posting entries without hesitating.

Example cards

Three cards the way you would write them, with the answer Lumi expects.

  • What is the accounting equation?

    Assets equal liabilities plus equity.

  • How do you calculate the current ratio?

    Current assets divided by current liabilities.

  • What does double entry mean?

    Every transaction affects at least two accounts, one debited and one credited for the same amount.

Example card

Try it, Lumi turns it into fill in the blank questions in your browser.

study-card.txt

Accounting and finance certifications · teach this card to Lumi

The accounting equation states that assets equal liabilities plus equity. In double entry bookkeeping every transaction is recorded as a debit in one account and a credit in another for the same amount. The current ratio divides current assets by current liabilities. IFRS standards are issued by the IASB.

Lumi’s question

The accounting equation states that assets equal liabilities plus _____.

Pick the missing word

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Answer right to light Lumi up

Its lamp fades when a fact slips away.

Frequently asked questions

How do I stop mixing up debit and credit?
Put each type of transaction on a card with the full entry, then post it from memory. Lumi asks it on different days, which fixes the direction (Cepeda et al., 2006).
Do I need to learn ratio formulas by heart?
Yes, together with what they measure. One card per ratio, the formula on one side and its meaning on the other, and Lumi asks for both.
Can I prepare for the CPA, ACCA or CFA with Lumi?
Yes. You write your cards from the body’s official syllabus and Lumi asks them back up to your exam date.

Read next

Active recall, why quizzing yourself beats rereadingReading once then quizzing three times gave 61% of ideas recalled after a week, against 40% for rereading four times (Roediger, 2006).Spaced repetition, how long to wait between two reviewsSpacing beats massing. The best gap between two sessions depends on how far away the exam is, with the benchmarks from Cepeda’s 2008 study.How to make a study schedule before an examA week-by-week study schedule built on Cepeda’s best-gap findings (2008) and Rawson and Dunlosky’s successive relearning.

Sources

  1. Roediger, Karpicke (2006). Test-enhanced learning. Taking memory tests improves long-term retention. Psychological Science, 17(3). doi.org/10.1111/j.1467-9280.2006.01693.x
  2. Cepeda, Pashler, Vul, Wixted, Rohrer (2006). Distributed practice in verbal recall tasks. A review and quantitative synthesis. Psychological Bulletin, 132(3). doi.org/10.1037/0033-2909.132.3.354

Teach this to Lumi

Give Lumi your accounting and finance certifications notes, it gives them back as questions at the right moment.

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