This study tests whether critical‐thinking skills can help explain the cross‐sectional variation in student performance in principles of accounting. Prior research has used such measures as academic aptitude and demographic factors to explain performance in the principles of accounting class. We argue that success in principles of accounting also requires critical‐thinking skills. We measured critical‐thinking skills by using a holistic scoring process to evaluate student essays. Our results show that even after controlling for academic aptitude, our measure of critical‐thinking skills contributes significantly to explaining the cross‐sectional variation in student performance in an accounting principles class. Understanding the relationship between critical thinking and success in accounting may contribute not only to reducing the failure rate in principles of accounting, but also to encouraging an emphasis on critical thinking in the preparation of accounting professionals.

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