Importance Of Mathematics In Accounting

Accounting is often an exercise in evaluating choices and making decisions. As a consequence, algebra can be an accountant’s best friend, as you employ a variety of what-if equations to draw up various scenarios, with which a client can arrive at the right decision.

Next, while computer programs can be wonderful tools, strong mathematics skills are important for that all-important “reality check.” What I mean by that is as you see numbers, your mind must be constantly evaluating whether a series of computed results make sense or whether you’re off a digit, some choices you make are sensible, why you are off in a series of formulas, etc.

Also Read: Accounting As The Language of Business

Something as silly as why don’t these numbers tie, turns out to be a difference of some multiple of nine - meaning you probably reversed digits during data entry (if you typed 36 instead of 63, for example, you will be off by 27 - a multiple of 9, or 57 instead of 75, being off by 18 - also a multiple of 9).

When performing audit, you cannot evaluate every transaction. Thus, you must use analytical tools such as statistical sampling, building in a margin of error that is acceptable). One would be hard-pressed to use statistics in their work, without strong math skills!

Finally, a client will often call me, while I am not with a computer or calculator and ask me to run a series of numbers to see how much to pay in with extension, project numbers to make a quick purchasing decision on the fly, etc.). One cannot perform such an important service absent strong math skills.

Note of caution: Don’t get into such a telephone conversation, while driving. Even if you have a hands-free device in your car, the level of concentration required is unbelievably distracting. Thus, if you need to answer the question, you first must pull off the road!