Conjuring a Reality: The Magic of the Practice of Accounting

Abstract

Purpose: Recently, magic has been given increasing attention by psychologists for what it can reveal about how the human cognitive system works. This paper examines whether these same cognitive processes are at play in another arena, specifi cally, the presentation of fi nancial accounting information.

Approach: The authors reviewed the fi ndings of cognitive scientists from their studies of magicians and applied these to the activities of professional accountants.

Findings: Specific cognitive processes which magicians and accountants take advantage of, explicitly for one and implicitly for the other, are the same: good continuation, habituation, and attentional capture.

Value: Further research regarding such interactions between accounting and cognition has potential for enhancing our understanding of both. Certainly at this particular point in accounting history, as standard setters seem to be moving ever closer to implementing some version of a principles-based accounting regime versus our current rules-based accounting regime, it is worthwhile to contemplate the conscious and subconscious effects of cognitive processes on how individuals perceive financial information.