Jackie Taylor-Pendergrass
Tennessee
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Project:
  This lesson was implemented as part of an Action Research Incentive Grant to develop work-focused Families First classrooms. For our project, learners opened a small business, a photo studio, to gain work skills and to experience how money can be earned. In order to teach learners how to utilize various business accounting tools, this learning activity was developed.

Subjects:
  Adult Basic Education, Vocabulary Development, Critical Thinking, Job Skills, Life Skills, Mathematics

Learner Level:
  Basic skills, grade level 5.0-8.9

Time Frame:
  2-3 class sessions

Learner Grouping:
  small group, whole class

Setting:
  This activity was presented to a Families First class that met 5 days a week for 4 hours a day. There were 4 learners in the class. Families First is the Tennessee program to provide training for those welfare recipients who lack basic education skills. While learners do work toward a GED, emphasis in these classes is shifting toward the knowledge, skills, and attitudes learners need to acquire and keep a good job. This activity was one of an entire unit of activities on how to open a small business. The lesson was implemented just after the grand opening of the Families First learner-operated small business, Smiling Faces Photo Studio Just 4 Kids

Email:
 

Program:
  Families First

Type of Program:
  ABE

learner Population Served:
  Basic skills (grade levels 6-8.9)

 
Accounting the Monopoly Way

Learners play a game of monopoly, utilizing an accounting tool to determine if they have made money or lost money. Learners predict what expenses may be incurred and as they travel the board, any inflows and outflows are documented in the appropriate categories on the profit and loss statement. For each trip around the board, learners determine the total amount of inflows and outflows, and calculate a bottom line figure. After a pre-determined number of trips around the board, the learners graph their predictions and actual outcomes, and write a comparison/contrast summary of their data. __________________________________________________________

Learning Objective:
Learners will demonstrate an understanding of accounting tools by utilizing a profit and loss statement during a game of Monopoly.

Learners will apply budgeting skills by predicting expense outflows and cash inflows on a monthly basis.

Learners will apply computation skills by determining monthly cash inflows and cash outflows with 90% accuracy.

Learners will evaluate their budgeting skills by comparing/contrasting predictions vs. actual expenses incurred over time.

Primary Skill:
Use math to solve problems and communicate

Secondary Skills:
Lifelong learning, learn through research, reflect and evaluate

Learner Needs & Goals:
Learners in my class expressed not understanding the accounting function small business activities. They felt it was something they could not grasp--that it must be too hard or too difficult to understand. Since learners chose to open a small business, they needed a fundimental understanding of accounting principles. In order to meet that need, this lesson was developed.

Learning Activity Description:
Accounting can be a very complicated, intimidating function of small business operation. I wanted to introduce the subject in an entertaining manner that would be fairly easy to grasp. Most learners have prior knowledge and experience playing the game Monopoly, a game based upon competition in the business market. In an attempt to build upon their math and critical thinking skills, reflect upon their life skills, and introduce accounting, this lesson was developed.

To introduce the lesson:

Have the learners sit around a large table for group discussion. Ask them what it means to keep records. Discuss the various ways they keep records of their monthly bills. List their methods on the board. Then ask the learners the following questions: "As a business owner, how do you decide how much to charge for your products or services? How do you know when you are making a profit or losing money? How can you have fun running your business, and have fun profitably? Is there enough cash to meet the needs of your business? When can you decide you have enough cash to expand your business? All of these questions can be answered by working with your CPA; but you, the business owner, must have a basic understanding of the language your accountant speaks."

Hand out the prepared vocabulary list of accounting terms (Handout 1) and discuss the meanings of each. Hand out copies of a balance sheet (Handout 5), a profit and loss statement (Handout 3), and a statement of cash flows (Handout 4). How are all of these worksheets similar? How are they different? Explain to the learners that just as they have various methods between them of keeping up with their bills, small business owners have many ways they can keep track of their expenses.

Using the Profit and Loss Statement:
Go through a couple of practice runs with the learners, plugging in the appropriate data in the correct column. Then, ask the learners to make a general list of the bills they had to pay last month, and estimate their amounts. Then have them list all of their income for that month. Using their personal information, have them plug in the data in the appropriate columns. Have them subtract their expenses from their net income. Was there any money left? Did their answer fall into the negative domain? What does it mean to have a negative number for an answer? What does a positive number mean?

Sample problem for the month of January:

Part A
Marc runs an auto body repair shop. For the month of January, he made $1,000.00, $528.00, and $3,210.67 for the repair of three different vehicles. What were his gross sales? Since no items were returned to him, what were his net sales? . The goods he needed to repair these vehicles cost him $1,419.28. What was his gross profit?

Part B
Marc's bills for the month of January were as follows:

  • Rent: $500.00
  • Utilities: $949.33
  • Telephone: $70.41
  • Insurance: $250.00
  • Payroll: $577.00
  • Marketing: $200.00
  • Other: $67.95
  • Taxes: $514.88

What were Marc's total expenses? What is Marc's net profit for the month of January?

Additional problems should be given to learners to illustrate a business income over a 4 to 6 month period. The results should be plotted on a graph, profit vs. time so the learners can see the fluctuations in a business income.

Sample Profit and Loss Statement:

For Year:________ January February March
INCOME
Gross Sales $4738.67
Less Returns 0
Net Sales $4738.67
Cost of Goods $1419.28
GROSS PROFIT $3319.39
EXPENSES
Salaries and Wages $577.00
Sales Commissions
Professional Services
Rent $500.00
Maintenance
Equipment Rental
Furniture and equipment purchases
Insurance $250.00
Utilities $949.33
Telephone $70.41
Office Supplies
Postage and Handling
Marketing and Advertising $200.00
Travel
Entertainment
Other $67.95
Taxes $514.88
TOTAL EXPENSES $3129.57
NET PROFIT (gross profit-total expenses) $189.82

The Monopoly Way:
Once learners have demonstrated their computation skills, review the rules to Monopoly. One trip around the board is equivalent to one month on their profit and loss statements. Hand out additional copies of profit and loss worksheets for the learners to use. They may use one worksheet to log their "forecasts," or predictions of expenses they expect to pay out. A second worksheet may be used to document actual inflows and outflows that occur during the game.

Before they begin, have the learners record on the profit and loss statement what bills they think they will have to pay out, and what income they expect to earn. Explain to them just as they would predict their own personal expenses for the upcoming month, businesses must be able to forecast any expenses. If a business owner cannot predict expenses and prepare for them, the business will not remain open long before running out of money.

Example:

January Forecast:

  • Gross Profit: $200.00 - passing "Go"
  • Total Expenses: $400.00 - real estate purchases
  • Net Profit: -$200.00

When they complete their forecasts, allow them to go the first round in Monopoly. At the end of each successive round, the learners calculate actual expenses and profit, then complete the predictions for the upcoming month. Allow the learners to play several rounds of Monopoly, perhaps an hour a day for a few days, or for as long as the teacher deems appropriate.

Results:
Ideally, the longer the learners play the game, the better results they will obtain. Have the learners plot a graph with their results, plotting net profits along one axis and time in months along the other axis. The forecasts may be plotted on the same graph as the actual results to illustrate how accurate their predictions actually were. Ask the learners to discuss their results.

Materials and Resources:

Assessment:
Informal assessments will include observation of the learners utilizing the profit and loss statements during a game of Monopoly and participation in group discussion, interpreting results of their game. Other formal assessments include the learners calculating their net profits with 90% accuracy, the completion of a comparison/contrast summary about their predictions versus their actual net profits, the completion of a short answer worksheet (Handout 2), and the completion of a graph illustrating their results.

Reflection:
Playing Monopoly with the accounting tools in place actually took more time than anticipated. Although worthwhile, if I were to implement this lesson again, I would allocate a certain amount of time each day for the continuation of the game, up to an hour a day for two weeks if necessary. I would do this because at the first half of the game, all the learners will show a net profit in the negative domain until the point is reached when all of the real estate is purchased. Only when the learners have monopolies on various lots will they begin to show increases in profit, especially when one or two of them begin building. At this point the activity illustrates a valuable lesson: it takes time to establish a profitable business in the real world; most businesses lose money the first few years of operation! Also, I would allow my learners to work in partners so that they would be able to work as a team and support each other, instead of placing the overbearing responsibility of using these accounting tools alone.

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