Error-Driven Learning: A Path to Mastery in Accounting and Finance

My 38 years of teaching accounting and finance at the University of Massachusetts Dartmouth, gave me this insight: one of the most effective ways to master these subjects is through error-driven learning; learning by making mistakes. Although I was always experimenting with various methods to help my students succeed, I discovered that learning from mistakes is a powerful approach and one that makes new knowledge “stick”. This approach is extremely important when learning accounting.

Understanding Error-Driven Learning

Error-driven learning is a method where mistakes are viewed not as failures but as opportunities for growth. It’s a central tenant of the growth mindset.  Instead of focusing solely on correctness, error-driven learning emphasizes reflection and improvement. It’s about not getting discouraged from errors but cherishing those errors as an opportunity to learn.

Too many of my accounting and finance students think getting the answer correct is proof of learning and a 100% on the homework is the only goal. But when students make errors and take time to analyze those errors, they identify gaps in their understanding and enhance their problem-solving skills. This method contrasts with traditional models that prioritize memorization, correctness, and perfection.

A key advantage of error-driven learning is its ability to strengthen memory retention. According to Charan Ranganath's book, Why We Remember: Unlocking Memory's Power to Hold on to What Matters, the brain works harder to reconcile discrepancies between incorrect and correct answers, and through that “struggle”, memory is effectively reinforced and learning happens.

Applying Error-Driven Learning

Accounting and finance courses do require precision and a deep understanding of rules and correct application of those rules (i.e., GAAP). But in working accounting problems, mistakes are common, low scores on homework and quizzes are frequent and students, even very good students, look at those errors as failures and some become completely turned off. This also happens often with CPA candidates. Low scores on practice tests can be discouraging. But that is when the student needs to fight back and turn on the tools of error-driven learning.

Here’s how error-driven learning can be applied effectively:

Embrace Mistakes in Practice Problems: Students should view incorrect answers as essential learning opportunities. Instead of quickly correcting errors, they should analyze what went wrong, whether it was a misunderstood concept or a missed step. This reflection transforms a wrong answer into a valuable learning experience. Solving a problem correctly may reinforce existing knowledge, but making and correcting mistakes can expand it.

Focus on Answer Rationales in Exam Preparation: A rationale explains why a particular answer is right or wrong, detailing the underlying concepts and reasoning. If used right, the rationale behind why an answer is correct versus why another answer choice is wrong, is an example of deep learning.  I recently read a very interesting book on the subject of deep learning entitled: Deep Work: Rules for Focused Success in a Distracted World by Cal Newport, a book we highly recommend.   When a student takes the time to understand their mistakes, their thinking goes beyond surface-level knowledge; they give themselves the chance to integrate new information, reinforce the application of knowledge, critically think, and apply learned concepts in various situations.

Here is a simple example of error-driven learning illustrated below via a financial accounting exam question. Assume that a student answered the question below incorrectly by choosing answer choice C. Then consider what could be learned by reviewing the rationales.

Which of the following entries correctly records the collection of an accounts receivable?

A) Debit Accounts Receivable, Credit Cash 

B) Debit Cash, Credit Accounts Receivable 

C) Debit Accounts Receivable, Credit Sales Revenue 

D) Debit Cash, Credit Service Revenue

Correct Answer: B) Debit Cash, Credit Accounts Receivable

Rationale for the Correct Answer:

B) Debit Cash, Credit Accounts Receivable: This entry is correct because when an accounts receivable is collected, the cash account increases, so it is debited. At the same time, the accounts receivable account decreases, so it is credited to reflect that the amount owed by the customer has been settled.

Rationales for Incorrect Answers:

A) Debit Accounts Receivable, Credit Cash: This entry is incorrect because it suggests that accounts receivable is increasing while cash is decreasing, which is not appropriate for recording a collection. Instead, the accounts receivable should decrease, and cash should increase.

C) Debit Accounts Receivable, Credit Sales Revenue: This entry is incorrect because it records a new sale rather than a collection of an existing receivable. Sales revenue should only be recorded when the sale occurs, not when the receivable is collected.

D) Debit Cash, Credit Service Revenue: This entry is incorrect because it records service revenue, which is relevant to recognizing revenue from a service, not collecting an accounts receivable. The correct entry should reflect the decrease in accounts receivable and the increase in cash.

Preparing for Exams: Iterations and Effective Study

Take the example of preparing for rigorous professional exams like the CPA. One strategy is to spend lots of hours taking practice quizzes and exams.  Practice tests certainly gauge performance and in many cases, good performance can help increase a student’s confidence.

But beyond a boost to self-efficacy, a mistake on practice test question should be a positive step towards mastery. Understanding why an answer is correct and why others are incorrect is a crucial step to mastery of the subject matter. This deeper engagement with the material enhances conceptual understanding. Students who understand the value of error-driven learning, treat their incorrect answers as motivation to “fill-in the gaps of knowledge” that they didn’t master up during college accounting courses.

Error-driven learning thrives on repetition. After identifying mistakes, students should revisit the material, attempt similar problems, and test their revised understanding. This iterative process of error, reflection, and correction leads to greater comprehension and mastery over time.

Practice exams and practice problems should not only gauge performance but also help identify and address weak areas. Error-driven learning enables students to focus their review efforts on topics where they have struggled, making their study time more efficient and improving overall performance.

Cultivating a Mindset for Success

Error-driven learning is more than a study technique; it’s a mindset. Students who adopt this approach develop resilience, curiosity, and a commitment to continuous improvement. They learn to view mistakes as valuable feedback and use them as steppingstones to mastery.

For example, during the COVID-19 pandemic, one of my standout remote students initially struggled with her homework scores, worrying that her low performance might indicate she had chosen the wrong major. I advised her to focus on understanding her errors rather than the scores. She became one of our top students and secured a position at a Big 4 accounting firm. She credited error-driven learning as a significant factor in her success. She told me that once she decided she wouldn’t get discouraged by practice scores and focused on learning from errors, her approach became transformative in her quest to learn accounting.

Error-driven learning fosters a deeper understanding of accounting and finance, promotes efficient study practices, and cultivates a resilient mindset. By embracing mistakes and using them as learning opportunities, students can achieve mastery and success in their studies and professional careers.

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Author: Michael P. Griffin, CPA, author of MBA Fundamentals Accounting and Finance, was an Associate Teaching Professor of Accounting and Finance at the Charlton College of Business, University of Massachusetts Dartmouth.