Jackie Taylor-Pendergrass
  This lesson was part of an Action Research Incentive Grant to develop work-focused Families First classrooms in Tennessee. For this project, learners opened a photography studio to gain work skills and to experience how money can be earned through self-employment. In order to appreciate how quickly money is spent when obtaining capital, this learning activity was developed.

  Life skills, mathematics, consumer education, employability

Learner Level:
  Basic Skills, grade level 5.0-8.9

Time Frame:
  4-5 class sessions, one hour daily

Learner Grouping:
  Individual, small group, whole class

  This activity was used with a Families First class that met 5 days a week for 4 hours a day. There were 5 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 the last lessons completing an entire unit of activities on opening a small business. The focus of this activity was to help learners construct an overall picture of the spending involved when obtaining the capital necessary to open for business.


  Families First

Type of Program:

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

"Where Has All The Money Gone?" A lesson in capital spending

Learners are walked through the process of balancing books by determining monthly totals of their small business spending. Learners then are introduced to the concept of in-kind resources, and recalculate expenses including all in-kind that was donated to their grant project. __________________________________________________________

Learning Objective:

  • Learners will compute the spending involved when obtaining the capital necessary to open for business by deducting all receipted expenses from the total start up capital with 100% accuracy.
  • Learners will evaluate the dollar value of donated time, resources, and materials by recalculating expenses to include all in-kind donations to their Action Research Grant project with 100% accuracy.
  • Learners will indicate their understanding of the "big picture" of business operation by reflecting upon what they've learned and making long-term predictions about the monthly balance sheets of their small business operations.

Primary Skill:
Lifelong learning

Secondary Skills:
Learn through research, reflect and evaluate

Learner Needs & Goals:
Although eye witness to all of the inventory that entered and exited their photography studio, several learners expressed a lack of understanding regarding actual spending of the $2,000.00 in Action Research Grant funds allocated to their class for the opening of a photography studio. It seemed they were having trouble understanding where all the money had gone! It never occurred to me before that this would pose a problem for them, since the group of learners that started this project remained in my class for the duration of it and were witness to, and many times assisted in the spending of the grant funds. Imagine their surprise the day of the grand opening of their portrait studio when I told them that all of our $2,000.00 had been spent and any more money we needed to spend could come only from the profits they made selling portraits! In an attempt to bring their understanding of small business ownership full circle, I developed this learning activity.

Learning Activity Description:

  1. Background
    Opening a small business involves obtaining a vast array of capital resources, from office and cleaning supplies and equipment-specific capital, to the leasing of a location, marketing, and company vehicle expenses. Part of being a successful small business owner involves keeping accurate records of company spending.

  2. Taking Stock of Where We Are: Calculating Funds Expended
    Give each learner one blank inventory journal per month of business operation (Handout 1). Either on an overhead transparency or on a sample sheet to pass around, show the learners a sample inventory journal (Handout 2). Explain that each inventory sheet represents spending for a one-month period. The month the inventory is recorded is written in the blank at the top. The amount of money in the account to purchase inventory with is written in the blank "Beginning Physical Inventory." In the left-hand column, each day of the month is listed. In the next column titled "description," the place the inventory was purchased is written. The cost of the purchase is written in the following column, and if any inventory was returned, the amount of the return is written in the last column. This process is repeated for all spending that occurred in the specified month.

    • At the bottom of the inventory journal, all spending is totaled for the month, as well as any returns. The cost is subtracted from the amount written in the blank "Beginning Physical Inventory," any returns are added, and a new total is written in at the bottom blank called "Ending Physical Inventory" (see sample inventory journal). The ending physical inventory becomes the beginning physical inventory for the next month, and the entire process is repeated for all succeeding months.

    • On the board, write the beginning physical inventory for the first month. Then write the name of the first location grant money was spent, and write the amount spent. Wait until all learners have subtracted it from the grant total. Encourage learners to help others around them without giving them the answer, but by showing them how to do it. As a class, have the learners give you their answers. When everyone comes up with the correct answer, write the next receipted purchase on the board. Since the learners' math skills are at various levels, you may write the names of all the locations of purchase on the board for the quicker math learners, but do not write all the spending amounts at once. Some learners tend to get much further ahead than others, and suddenly the class will cease to work together as a whole.

    • Once all spending has been subtracted from the total grant amount, have the learners graph their results. Which month incurred the highest spending? What was happening that month that may have affected spending? Which month incurred the lowest spending? Why was spending down that month? Discuss their results.

  3. Taking Stock of Where We Are: Calculating In-Kind Expenses
    • Hand out blank copies of your school system's in-kind sheets. Explain to the learners that money comes in all forms, not just cash, but through the donation of time, materials, and resources. By providing the appropriate information, have the learners calculate all in-kind that was donated towards their project. Have the learners determine totals for each month of in-kind.

    • Once all in-kind is calculated and totals are determined, have the learners graph their results. Which month had the largest in-kind donation? Which month had the lowest in-kind donation? What was occurring those months that may have affected donations?

  4. Making Inferences Based on Reflections
    • How do the in-kind donations compare to the monthly grant spending? Are the monthly peaks and lows similar or different? Why? If your small business were funded through a loan from a bank instead of from a grant, how much more money would you have to request from the bank? Why is this?

    • How would you predict long term small business spending? Would it increase? Decrease? Would there be any seasonal fluctuations in spending? Why?

Materials and Resources:

Attachments: (For Internet Explorer users, right click on link then choose "Save target as". For Netscape users, just hold down the shift key and click on the link.)

The first two objectives are formally assessed - did the learner complete his/her calculations with 100% accuracy? The third objective is assessed formally and informally: the learner completed graphs plotting his/her data and explained his/her results. The questions asked of the learners at the end of the activity may be asked orally, or you may ask for written responses from them.

If I were to repeat this activity another time, I would initiate this activity at the beginning of the project and have the activity be an ongoing one; the learners would keep their own tally sheets in their ring binder, subtracting receipts as expenses are incurred. This way they would know exactly where we stand financially at any given point during the project. I would also have learners calculate mileage on my vehicle, which was the company car, and determine the additional wear and tear placed upon it as a result of its use.


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