Teach Accounting With a Monopoly Board
Board Walk and Park Place Were Never Like This!
October 4, 1999 Everyone knows how to play Monopoly, but has anyone ever considered its advantages as a simulation game in the classroom to teach financial accounting? Motivating today's student to learn our profession often involves more than book learning. Getting students involved in a game goes a long way to entertaining them -- while intentionally reinforcing academics.
The Need for Different Methods
I also was searching for instructional methods that would improve my own teaching effectiveness. Not much learning takes place in the traditional lecture method (so frequently used in accounting courses). Discussion-based classes do better, but the best learning takes place when students must make their own decisions after analyzing and evaluating unique situations.
It became apparent that using a simulation game could be one part of a solution. A simulation game imitates some part of reality, yet is a contest. Simulation games offer the following advantages:
In fleshing out this idea, I came across an article in Issues in Accounting Education by Robert Kneckel, describing how he had students play Monopoly and then prepare an Income Statement and Balance Sheet at the conclusion of the game. I was intrigued by the thought of using the game, but felt that two modifications might improve the instructional effectiveness of its use.
First, I reasoned that it would be better for students to prepare financial statements at regular intervals during the game -- feedback from earlier assignments could be incorporated by a student into new assignments. Also, working in the accounting environment during the game would give students an opportunity to apply accrual accounting. And, since the purpose of the game is to drive everyone else into bankruptcy, the financial statements would pretty much look the same. In addition, Kneckel's approach gave students no opportunity to use the accounting information to make decisions.
Playing the Game
At the conclusion of the first year, the students each prepare a set of financial statements for their token, with adjusting entries for income tax (a percentage of net income), interest, depreciation on houses and hotels, and accrued salary for progress around the board. The financial statements are submitted for grading, and I assume the role of public auditor.
After grading the first year financial statements, I transcribe them into a spreadsheet and upload it to the course Web page, http://www.profalbrecht.com/classes/acct321/realmoney/. Students then must view and analyze the four sets of financial statements for each game. Each student is allocated an imaginary $100 per game for investment. Essentially, students must wager on whom they think will eventually win each game.
In a typical game, about two-thirds of the properties have been acquired by the end of the first year, but there are no monopolies. The investment patterns show wide-spread diversification. If a token is perceived to have a slight advantage based on total property acquired, then an average investment or wager will be $30-35. Those tokens perceived to be behind will have averaged $15-20 of investment support.
After I collect each student's investments or bets, the class is instructed to play a second year of Monopoly and submit financial statements. After grading the financial statement for all tokens in each game, I publish them again on the course Web page.
Again, students receive $100 of investment per game. In a typical game, most of the properties have been acquired, and some monopolies have been created as a result of trades. Average investments or bets range from about $50 for tokens with the greatest perceived advantage in properties and houses, to $10 for tokens with the least future earnings capabilities.
Next, students play a third year of Monopoly, submit financial statements and engage in another round of betting with an additional $100 per game. There are two patterns of game results reflected in the financials. In some games, there are two or three competing tokens with monopolies, and investments in houses and hotels. Financial distress in the losing companies is very evident. In other games, all tokens are still very close. In the games with two or three leading companies' tokens, amounts run an average of $40 to $90. In the games with equal earning tokens, amounts average about $25.
The fourth and final year of Monopoly is played, and students submit financial statements for grading. A winner for each game is declared based on a highest retained earnings. The wagers for each year are tallied and winnings are presented to each student that invested on the winning token.
What They Learn
This simulation class can be used in financial accounting courses at many levels. It could effectively be used as a review in Intermediate Accounting or to supplement an introductory course. It can also be used in MBA classes. I generally do not force MBA students to prepare journal entries, allowing them the option of analyzing the effects of transactions through use of a detailed balance sheet equation. Financial statements are then prepared from this analysis.2000, SmartPros. All Rights Reserved.