High School Grades as Performance Predictors for
University Accounting Courses

The entrance grades of first year business students are rising at many universities. At Wilfrid Laurier University (WLU), students with a high school average equal to or above the cutoff grade are automatically offered a position in the Bachelor of Business Administration program. The cutoff grade for this program was 86% in 2000 versus 80% in 1987.

The grade increase may reflect the increasing popularity of business degrees, demographics (exacerbated recently by Ontario’s “double cohort” effect on university applications), and/or a “marks inflation” trend at the high school level. In this article, we examine some university entrance requirements in relation to students’ success in introductory accounting courses.

We studied the appropriateness of WLU’s published entrance requirements and the impact of requiring a 70% minimum grade in both OAC English and Calculus for entering business students. We collected high school and university level grades for all students entering WLU’s School of Business and Economics (SBE) in both 1997 and 2000. Our analysis supported an increase from 60% to 70% for the minimum high school entrance grade requirement, for both English and Calculus.

Overview of Introductory Accounting Courses at WLU

All business students in WLU-SBE must take the introductory Financial Accounting and Management Accounting courses.

The introductory Financial Accounting course (BU227) is “traditional”. It does not use the ANITA (A New Introduction to Accounting) approach introduced in the 1990s at many Canadian Universities (due, in part, to the Accounting Education Committee’s report on the appropriateness of the first course in accounting).

The introductory Management Accounting course (BU247) is closer to the ANITA model in its integrative approach and its use of unstructured cases.

In short, the introductory Financial Accounting course includes topics that students may have been exposed to in high school accounting, such as the use of journal entries and the preparation of financial statements. It involves little direct use of advanced mathematical skills. Alternatively, the introductory Management Accounting course involves more calculations, re-arranging of formulas, and optimization. It relies more on skills that may have been developed in advanced high-school mathematics courses. The Management Accounting course is expected to correlate with Calculus marks (e.g., logical setups, finding unknowns), and may be expected to correlate more with English scores in terms of case write-ups.

Analysis

We collected the following grades: high-school English, Calculus, and overall average grades; university (SBE) overall GPA, Business GPA, and marks in introductory business courses. We used them to measure the relationship between performance in high school English and Calculus and success in university accounting courses.

As might be expected, the two accounting course grades correlate highly, and both are excellent predictors of overall university level performance (better predictors than the high school grades). Analysis of the 2000 data also shows a significant difference in performance between students whose high school English and Calculus grades were greater than or equal to 70%, versus students that had lower grades.

Table 1 shows the difference in accounting course grades, partitioned by high school entering grades. The average grades are presented in terms of GPA. A GPA of 5, 6, 7, 8, 9, or 10 corresponds to a mark of C, C+, B-, B, B+, and A- respectively. This table indicates that marks in introductory Financial Accounting at WLU tend to be higher than marks in introductory Management Accounting. In addition, the results indicate the following:

• High school English and Calculus are important predictors of a student’s success in Financial Accounting
• High school Calculus is an important predictor of a student’s success in Management Accounting

The poor Management Accounting marks of students with grades under 70% in high school Calculus are troubling. The School of Business at WLU requires students to maintain a minimum overall GPA of 7.0 in their business courses. A student entering the program with a grade under 70% in high school Calculus would find it much more difficult to meet the progression requirements.

Calculus is more important to Management Accounting (and, to a lesser extent, to Financial Accounting) than to the average business course. Further analysis (not reported separately) indicates that students entering WLU-SBE in 2000 with a Calculus grade of <70% end up with a GPA for all of their business courses of 0.63 less than those entering with a Calculus grade of greater than or equal to 70%. Per Table 1, the difference in GPA is 1.63 less in Management Accounting and 1.19 less in Financial Accounting.

Table 1: Relationship between Entering Grades and Accounting Course Performance

High School Grade of Students Entering in 2000

	Calculus grade < 70%	Calculus grade > or = 70%	English grade < 70%	English grade > or = 70%	Calculus or English grades < 70%	Calculus and English grades > or = 70%
Financial Accounting	8.28*	9.47*	8.25*	9.32*	8.27*	9.49*
Management Accounting	5.48*	7.11*	6.50	6.88	5.54*	7.11*

* Difference significant at 1% level

By contrast, high school English seems less important to accounting courses than to other business courses. While students entering with an English grade of <70% end up with a GPA for all of their business courses of 2.35 less than those entering with an English grade of >70%, the difference in GPA is only 0.38 in Management Accounting and 1.07 in Financial Accounting. We obtained similar results for our 1997 sample (i.e., Calculus more important to accounting, and to Management Accounting in particular; English a less important predictor for accounting courses). However, the high-school Calculus results may be more generalizable than the English results, as few sample students (16) had marks under 70% in English (versus 79 students with low marks in Calculus).

We obtain consistent results when comparing students entering with marks important to introductory Management Accounting, followed by Financial Accounting and other business courses, in both 2000 and 1997. On the other hand, a high school English grade under 75% affects the overall business GPA (at a 0.01 significance level), but has a minor, statistically insignificant effect on success in introductory Financial and Management Accounting.

Conclusions

We find that performance in high school English and Calculus is an important predictor of success in university business courses. Specifically, high school Calculus grades are more important in terms of predicting success in university Management Accounting courses than for overall performance in business degree courses. In contrast, high-school English grades appear to be more important in preparing students for non-accounting business courses. While the latter result is not overly surprising, it is notable that English is not an important predictor of success in our case-based introductory Management Accounting course. Others may wish to test the generalizability of these results.

Mary Kelly and Bruce J. McConomy
Wilfrid Laurier University