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28 April 2010 by shartley   

In Business Studies this week Year 11 students played Monopoly.  As they wheeled and dealed their way around the board students recorded their transactions according to the principles of double-entry accounting.  When the game was called to a halt financial statements were constructed.
The income from passing Go, the rent received and prizes for coming second in beauty competitions were recorded as revenue.  Then all the rent, doctors’ fees, school fees and speeding fines paid were recorded as expenses.  The net profit was calculated by taking expenses away from revenue.  This is all listed on the Revenue Statement.
Then on the Balance Sheet the profit was categorised as capital.  Any amounts owed to the bank due to mortgaged properties were listed as liabilities.  Property, houses, hotels and cash held were all listed as assets.  For the Balance Sheet to actually balance: assets = liabilities + capital.
One major check was seeing if the cash remaining did indeed match the calculation according to the recorded transactions.  Often it didn’t.
There were errors made by all but everyone had fun and from the process understood the basics of how financial statements are constructed.

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