Monopoly

Recently, in my Accounting class, we started discussing the four major accounting documents used in any business:

The Balance Sheet
The Income Statement
The Statement of Retained Earnings
The Statement of Cash Flows

In order to illustrate how these documents can be used, my professor brought in several sets of the classic board game Monopoly and gave us specific instructions for game play. We were broken into groups and played as pairs in our own "business partnership." Each pair was given $1500 in stock and $500 in a bank loan (equity and liability, respectively) and was told to purchase any property on which we landed, and to build a house on that property. All along, we were to keep account of everything we bought, paid out, or collected, listing every monetary transaction as either an increase or a decrease in cash.

By the end of the game, an arbitrary time decided upon by the professor, we were to match up the amount of cash in our hands with the amount of cash in the paperwork. Being naturally gifted with math and everything numerical, I was able to come up with that accounting very easily and quickly and precisely. Following this, we were to create a beginning and ending balance sheet to determine our ending assets and equity (the liabilities, the $500 loan, did not change). Our ending assets (property and cash) totaled $2188, and our ending equity totaled $1688. Upon finding this value, we created an income statement to determine whether we had a net gain or loss. We obtained a net income of $188. Success!

We did not get to the other two statements during the Monopoly game, however we did discuss them in class this past Tuesday. We have been practicing creating these statements and calculating the respective values in order to get used to reading and interpreting financial accounting statements. So far, I am enjoying this class. I will be sure to blog more about my experiences and learning as the semester progresses.