Your Cognitive Processes

[Editor's Note: this article is in reference to the old paper-based exam, not the computer-based exam that is now in use.]

If, by better understanding how you study and how you can be more efficient and effective, you improve your study processes 20 percent, you might change 80 percent grades to 96 percent grades and reduce 30 hours per week in the library to 24 hours.

Your learning process
Learning in the broad sense is the change in behavior or knowledge as a result of experience, practice, effort, etc. We are particularly interested in the narrower definition, i.e., knowledge (in particular, accounting-related knowledge), in contrast to other behaviors and skills, like riding a bicycle, or vocational skills, like cutting hair.

Psychologists have defined many categories of learning, such as classical conditioning, trial-and-error learning, sensorimotor learning, verbal learning, concept learning, and rule learning. Accountants focus on concept learning and rule learning.

Most accounting and business concepts are multidimen-sional; therefore, they can be better understood by examining their multiple aspects. For example, you might view a financial accounting transaction in light of journal entry(ies) required:

This multidimensionality describes understanding, i.e., relating many concepts, rules, and relationships. The above list is an abbreviated example; take a few minutes to pencil in a few additional dimensions in the margin. Train yourself to consider the implications of the underlying business transactions for all accounting procedures you study. For example, what effect will a given procedure have on:

Levels of cognitive ability
In ascending order of complexity, one categorization (Bloom) of the levels of knowledge is "recall knowledge".

The levels above "recall knowledge" tend to be cumulative. They constitute building blocks of cognitive processes. To interpret, you need some recall knowledge; to solve problems, you must understand to interpret, etc.

1. Recall knowledge. The first level is recall knowledge, e.g., definitions of technical terms and sources of information. Objective questions often test this kind of knowledge, which is the most fundamental since it entails basic memorization.

EXAMPLE: According to Statement on Financial Accounting Concepts No. 2, the two primary decision-specific qualitative characteristics of accounting information are reliability and relevance. This requires little mental processing beyond simple recall.

2. Understanding to interpret. The second level of knowledge is the understanding and interpretation of written and quantitative data. Questions at this level test understanding of concepts, including interrelationships within data. This level of knowledge is also called comprehension.

EXAMPLE: SFAC 2 defines reliability as the "quality of information that provides assurance that the information is reasonably free from error and bias and faithfully represents what it purports to represent." What does this mean? Do you understand? Can you explain it to someone else? The ability to explain it to someone else is a very good indicator of your comprehension.

3. Application of knowledge to solve problems. The third level of knowledge is problem solving. Questions at this level examine practical applications of concepts to solve a problem. Unfortunately, some problem solving is based only on recall knowledge.

EXAMPLE: Memorizing the cost of goods sold formula (CGS = BI + Pur --- EI) is mere recall. Instead you should understand that CGS equals purchases adjusted for the change in inventory. For example, an increase in inventory means that not all of purchases were sold. Conversely, a decrease in inventory means all of purchases plus some inventory were sold.

Given BI, Pur, and EI, most students can solve for CGS by plugging numbers into the formula. But an interpretive understanding of the relationship of the change in inventory level to CGS permits solving of more complex problems, e.g., effect of inventory errors.

4. Analytical skills. The fourth level of knowledge is analytical ability, including identification of cause-and-effect relationships, internal inconsistencies or consistencies, relevant and irrelevant items, and underlying assumptions. The following question requires analysis and interrelation of a number of variables to reach a conclusion.

EXAMPLE: Would you accept a customer's order at a lower-than-usual price? Variables to con-sider include contribution margin generated, available production capacity, and psychological and economic effects on other customers.

5. Synthesis. The fifth level is the ability to put parts together to form a new whole.

EXAMPLE: The development of the FASBs major pension pronouncement (SFAS 87, Employers' Accounting for Pensions) illustrates the synthesis of existing elements. It retains such aspects of prior pension accounting as delayed recognition of certain events, reporting net cost, and offsetting liabilities and assets. SFAS 87 combines them with applications of the existing principles of accrual accounting, full disclosure, and comparability to develop a new approach to pension accounting.

6. Ability to evaluate. The sixth level is evaluative ability. What is the best (most effective) method (alternative)? Evaluation has in common with analysis and synthesis the consideration of qualita-tive as well as quantitative variables. Qualitative variables are usually multidimensional and thus cannot be meaningfully quantified or measured. For example, multiple-choice questions consist of a series of either true or false statements with one exception (the correct answer); if the question is evalua-tive, all of the answer choices will be true or false, but one answer will be better than the others.

EXAMPLE: "The most important non-financial issue that a company should consider is..." requires evaluation of qualitative variables.

Undergraduate accounting courses generally emphasize the first three levels: Recall, interpretation, and problem solving. Your career in professional accounting, however, will require and empha-size the last three levels: Analysis, synthesis, and evaluation.

Put another way, the first three levels are required to prepare financial data. The second three are necessary to use financial data and exercise professional judgment. How does accounting differ from bookkeeping? Professional judgment.

Yes, in your study of accounting, you must go well beyond recall and memorization. Many accountants move on to executive positions after beginning their professional career as an "accountant." Even those who remain in accounting exercise more and more judgment and rely less and less on rote memory as they take on and exercise more responsibility.

Gleim Publications develops and distributes books and software to help you learn and understand accounting and aviation (pilot training) knowledge. Gleim helps you attain the higher levels of knowledge while you learn concepts and problem solving techniques. Their mission is to maximize knowledge transfer to you while minimizing your time, frustration, and cost.