Rose Marie L. Bukics
In my quest to make this material more meaningful and relevant to the students, I decided that the students needed to somehow “participate” in a balance sheet in order to learn, rather than just memorize, the material. Thus I devised a learning exercise that would allow the students to become a human balance sheet.
I implemented the exercise in my two intermediate classes of 24 students each. I had assigned the reading on the balance sheet in advance and I began class with a brief discussion of the general order of accounts on the balance sheet, i.e. assets based on liquidity, liabilities based on maturity, and equity based on permanency. I then began the two-part learning exercise.
For the first part, I asked each member of the class to select a card from a pile of cards I handed out face down. Each card contained the name of a single balance sheet account. (See Appendix A for a list of the accounts used.) I made the cards using various colors of construction paper, cutting each sheet in half and writing in large letters the name of a balance sheet account. The cards had to be large enough that the students on opposite sides of the room could read what was written on the card. I also made sure that not all accounts of the same type were the same color, e.g. assets were not all on yellow paper, so that students didn't think that the color of the card was a clue on how to proceed. After all of the students had selected a card, they were told to line up in the proper order to form a classified balance sheet. My only guidelines were that students with asset accounts should line up on one side of the room while those with liabilities and equity accounts should line up on the other.
The discussion among students that ensued was an educator’s delight. While most of the students were quick to determine which side of the room was appropriate for their assigned accounts, they had more difficulty trying to determine where in the chain of their classmates they belonged. Once they thought they knew where they belonged, they tried to position themselves in the chain. Yet to solidify their place they had to justify to the other students why they belonged wherever it was that they were trying to enter the line. After various negotiations, all of the students found a preliminary home for their respective accounts. I then asked them to turn their cards outward so that the students on the other side of the room could see what account each student represented.
I directed the student evaluation of the results by asking the liability and equity members to offer comments or corrections on what they saw on the asset side. Whenever an account was deemed to be in the wrong place in the chain, the student was forced out of line and had to begin anew to find a different place in line. While the student was trying to figure out why he or she had to move, as well as what other places in line might be appropriate, other students were questioning what the account was, what it represented and were also offering advice as to where they thought the student should go.
This process was repeated again for the liability and equity chain, with the asset-side students offering advice, recommendations, and/or proposing changes. During the discussion students eventually concluded that they had to understand the general guidelines of how and why accounts were arranged in the specific order found on a properly classified balance sheet.
For the second part of the exercise I selected certain balance sheet accounts (see Appendix B) and asked the students holding those accounts to remain standing. I then collected the account cards from the other students and asked them to draw a new card. The second pile of cards contained standard balance sheet valuations for select asset, liability and equity accounts. The students were told that they had to partner with the student holding the relevant balance sheet account.
These students then had to evaluate the valuation described on their card and decide which of the balance sheet accounts still held by fellow students best matched the valuation contained on their new cards. They then had to convince the student holding that account card that they represented the corresponding balance sheet valuation. Once again, a lively discussion ensued since the student holding the valuation card had to justify the proposed partnering with the account card.
The total experiment with 24 students in a class took about 40 minutes of class time. After the experiment was complete I gave the students a model balance sheet for reference and several homework problems for the following class. The problems were designed to reinforce the specific information covered in the experiment. One assigned problem was identification of the proper classification of various accounts, a second was a matching problem on valuation and the third was a balance sheet with multiple errors that the students had to identify and correct.
In the following class, I asked students to perform an open-ended evaluation of the experiment as a tool for learning balance sheet classification and valuation. The students could include or omit their name. Only five students put their name on the evaluation.
Of the 45 responses received, 43 students (95%) responded that the experiment was useful, helpful or aided them in mastery of the material. One student described it as not very helpful, while another described it as awful.
There were many favorable comments about the class itself. Several students referred to the class as different, fun, and a great interactive way to learn. Students also consistently referred to their ability to visualize or picture the balance sheet in their minds as they were doing the homework problem. One student said that even if he didn't remember it all, he would never forget the card that he had. Another referred to remembering the accounts that got forced out of line and where the new placement fit into the balance sheet.
Other student comments suggested that they wished they could have taken notes during the learning exercise. However, I believe that this would be detrimental to the flow of the learning exercise; this was why I gave students written documentation post-experiment for reference while completing the homework assignment. Several students also commented that more time for discussion was needed on the valuation part of the exercise. This I will incorporate next term when I repeat the exercise.
My objective in designing this learning exercise was to create an interactive learning experience that was both fun for students and also allowed them to master balance sheet valuation and classification. Since over 95% of the students said it was helpful or useful in their mastery of the topic, I have concluded that it is an learning exercise that should be repeated in subsequent terms.
Questions or comments on this article or use of the human balance sheet as an instructional tool can be sent to bukicsr@lafayette.edu
Accounts Payable
Accounts Receivable
Bonds Payable
Building
Cash
Common Stock
Equipment
Franchise
Goodwill
Idle Equipment
Inventory
Investment in XYZ Company Stock
Land
Marketable Securities
Mortgage Payable
Notes Payable
Paid in Excess of Par
Patent
Preferred Stock
Receivable due from the Company President
Retained Earnings
Treasury Stock
Wages Payable
Accounts Payable
Accounts Receivable
Bonds Payable
Equipment
Franchise
Idle Equipment
Inventory
Investment in XYZ Company Stock
Land
Paid in Excess of Par
Preferred Stock
Treasury Stock
Amount when due
Book Value
Cost of Reacquisition
Difference between selling price and assigned value at issue
Estimated resale value
Historical Cost
Lower of Cost or Market
Market Value
Net Realizable Value
Par Value
Present Value of Future Cash Flows
Unamortized Balance