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FINANCIAL GAMES FOR TRAINING
JOHN KIND
www.routledge.com � an informa business
ISBN 978-0-815-38902-6
9780566085482_cover.indd 1 10/30/2017 5:38:55 PM
© John Kind 2004
John Kind has asserted his right under the Copyright, Designs and Patents Act 1988 to be identified as the author of this Work.
First published 2004 by Gower Publishing
Reissued 2018 by Routledge2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN711 Third Avenue, New York, NY 10017, USA
Routledge is an imprint of the Taylor & Francis Group, an informa business
All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers.
A Library of Congress record exists under LC control number: 2003116174
Notice:Product or corporate names may be trademarks or registered trademarks, andare used only for identification and explanation without intent to infringe.
Publisher’s NoteThe publisher has gone to great lengths to ensure the quality of this reprint butpoints out that some imperfections in the original copies may be apparent.
DisclaimerThe publisher has made every effort to trace copyright holders and welcomescorrespondence from those they have been unable to contact.
ISBN 13: 978-0-815-38902-6 (hbk) ISBN 13: 978-1-351-15824-4 (ebk)
Typeset by Adrian McLaughlin, [email protected]
Contents
Introduction About this book How to use this book The main formats of activities and games Ten ways to get the best out of this book Acknowledgements
Index by topic
Index by type of game
Section 1 Understanding Financial Statements and Financial Terminology
Game 1 Nitty Gritty - Double-entry book-keeping exercise Game 2 Nursery Slopes - Accounting principles crossword Game 3 Rubric - Flipchart exercise: balance sheets and
profit and loss accounts Game 4 Beijing - Balance sheet puzzle Game 5 Bottom Line - Profit and loss account quiz Game 6 Snapshot - Balance sheet quiz Game 7 Housey-Housey - Profit and loss account quiz Game 8 Lotto - Balance sheet quiz Game 9 The Bean Scale - Balance sheet quiz Game 10 Squares - Balance sheet quiz Game 11 Threadneedle - Word search puzzle: the profit and loss
accountGame 12 Merlin - Balance sheet puzzle Game 13 Scoop - Profit and loss account puzzle Game 14 Wall Street - Sources and uses of cash exercise Game 15 Hang Seng - Cash flow true/false quiz Game 16 Lombard Street - Cash flow case study and quiz Game 17 Go-Go - Case study: generating cash/earning a profit Game 18 Cathedral Enterprises - Calculating cash flows from
the profit and loss account and balance sheets
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Financial Games for Training
Game 19 Crystal Ball Pic - Case study: cash flow forecasting Game 20 Alphabeta etc. - Financial general knowledge quiz Game 21 Atticus - Financial terminology crossword puzzle Game 22 Buzz Words - Financial vignettes: explaining
financial termsGame 23 Footsie - More financial terms Game 24 ‘Who Wants to be a Millionaire?’ - Financial general
knowledge quiz
Section 2 Analysing and Interpreting Financial Statements to Diagnose and then Improve Business Performance
Game 25 Pairing-Up - Identifying financial ratios Game 26 Getting Better Pic - Financial performance improvement
planGame 27 Puff Limited - Calculating financial ratios/statisticsGame 28 MasterMind - Financial ratios quizGame 29 Great Expectations - Identifying financial trends quizGame 30 Cryptics - Ratio anagramsGame 31 Shaping-Up - Ratio jigsawGame 32 CrossNumbers - Number crossword puzzle on financial
statements/ratiosGame 33 Secret Genius® Limited - Short-term financial planning quiz Game 34 Auntie EVA - Economic value added quiz Game 35 Smoke and Mirrors - Accounting manoeuvres:
brainstormingGame 36 Brainstorm (or a ‘Thought Shower’) - 51 ideas for better
financial results
Section 3 Management Accounting: Using Financial Information to Make Better Business Decisions
Game 37 Costorm - Cost brainstorming: identifying the different categories of cost
Game 38 Discriminate - Cost matrix: classifying costs Game 39 Moorgate Limited - Cost structures case study Game 40 St Trinians - Costing maze: calculating product costs Game 41 Wykeham Pharma Pic - Standard costing and
variance analysisGame 42 Pick ’n’ Mix - Management accounting quiz Game 43 Up to Standard -True/false quiz on costing Game 44 Lubeoil - Case study on break-even and contribution Game 45 Finsbury Circus Bureau - Case study on cost structure Game 46 Richard Osmond Limited - Case study on ‘relevant’ costs Game 47 Supergrease Pic - Case study on contribution analysis
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Contents
Game 48 Slithy Toves and Mome Raths - Case study: ‘make or buy?’ Game 49 Line Dancing (1) - Break-even analysis Game 50 Line Dancing (2) - More advanced break-even analysis Game 51 Budget Builder - Budgeting for the next financial year Game 52 Stanrow Airport - Financial forecasting Game 53 St Trinians II: As Easy as ‘ABC’ - Calculating activity-based
costsGame 54 Leeder Lingerie Limited (Part 1) - Case study on cost terms
and outsourcingGame 55 Leeder Lingerie Limited (Part 2) - A more complex
outsourcing decisionGame 56 Culver Manufacturing - Asset replacement case study Game 57 Ningbo Limited - Case study: key factor analysis Game 58 Black Sheep - ‘Odd one out’ quiz on management
accounting termsGame 59 Exchequer - Crossword puzzle: management
accounting termsGame 60 ‘Inwords’ - Puzzle on cost termsGame 61 Blank Squares - Crossword puzzle on customer profitability Game 62 Adding Value - Value added statements quiz Game 63 Midas Touch - Time value of money quiz Game 64 Omnibus - Project appraisal quiz Game 65 Scrabbling - Project appraisal quiz Game 66 Decent Proposal - Preparing a business case
crossword puzzleGame 67 Misfits - ‘Odd one out’ quiz on project appraisal terms
Section 4 Suggested Answers
Sections Appendices1. Present value table2. Future value table
About John Kind Learning
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Introduction
Accounting and Finance is, perhaps, the ‘ugly duckling’ of business subjects. It suffers from an image of dullness and complexity that is not always dis-pelled when accountants and financial managers communicate with and train their ‘non-financial’ colleagues.
Financial Games for Training aims to challenge and change all these per-ceptions. It is a comprehensive collection of activities. They are all designed to introduce much more ‘fun’ and participative elements into the way finan-cial training programmes are designed and presented, particularly for exec-utives and students who need to obtain a practical grasp of finance for business.
The collection has been extensively tested in ‘real-life’ training situations. So, whether you are a trainer presenting a course or an executive or student wishing to improve your financial skills, this book is for you.
If you have any suggestions, comments or questions about the contents of the book, please contact John Kind at [email protected]. Feedback is welcome.
About this book
The financial training activities and games in this book have been created to help executives and students learn financial skills and develop their busi-ness acumen. The content is relevant to all types of business sector and to all levels of seniority.
By definition, games are active. They involve carrying out tasks, which means they help participants to understand and apply the financial concepts and techniques they are learning. And, because financial knowledge is being gained in a friendly and interactive way, retention is increased.
Easy to run
Straightforward but detailed guidance notes are provided which means that the minimum of preparation is necessary. The effort and time saved can be
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Financial Games for Training
used to give more in-depth explanations and to discuss organization- specific financial information which participants should be encouraged to bring with them.
Comprehensive
Each activity comes with everything that is necessary to run a successfultraining session - handouts, worksheets, guidance notes and suggestedanswers.
Apart from this Introduction there are four Sections:
activities and games devoted to learning more about financial state-ments and financial terms (Games 1-24)activities and games that give plenty of practice at interpreting financialstatements and using financial ratios/indicators to diagnose and then improve business performance (Games 25-36)activities and games that focus on management accounting - using inter-nal financial information to make better business decisions (Games37-67)suggested answers to reinforce participants’ learning.
The contents list puts the activities and games in number order with a short description. All the games have been given a name to help remember what they are about.
The index summarizes all the material by financial topic as well as by type of game, for example, an anagram, a crossword, a jigsaw or a multiple-choice quiz.
Generic
Whether your audience comes from manufacturing or the service sector, the activities and games focus on developing generic financial skills and know-ledge - skills that are transferable across a wide range of organizations and situations. An ‘open content’ approach is used, which means that partici-pants can relate the topics to their own roles and responsibilities thus helping to ensure that the learning can be applied to their work situations.
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Variety
The 67 activities and games range from 10 -15 minute assignments to 30-45 minute financial general knowledge tests, and include anagrams, bingo
Introduction
games, a card game, flipchart exercises, quizzes, crosswords, ‘mazes’ and jigsaw puzzles, word searches, brainstorming sessions and ‘snakes and ladders’. There is also a mix of individual and group activities.
The financial topics covered are very wide-ranging, from double-entry book-keeping to financial statements and ratios, from break-even analysis to outsourcing and from economic value added to project appraisal. This means that the training can be kept varied and interesting, and individual topics can be approached from several different angles.
How to use this book
Each type of activity or game is described with a clear set of guidance notesfor the tutor. Information is provided under the following headings:
Format - to be done individually and/or in small groups of three or four participants
Time - estimated times for the activity. Estimated times are also given for the various parts of an activity when applicable.
Learning Objective® - a short summary of the aims of the activity. You might consider sharing the objective® with the participants since it will help them to concentrate during the activity.
Resources - for example, photocopies of the appropriate diagram and quiz, flipcharts and a PowerPoint slide.
Learning Process - this phrase refers to how the activity should be carried out covering both the administrative steps and the ways to facilitate discussion and learning. The comments have been kept as brief as possi-ble so they can be easily referred to and they have been described in a general way to allow maximum discretion.
Handouts
These follow the guidelines for each activity. They contain brief instructions to the participants on how to perform the activity or task and they are given either in a structured format or as a worksheet. The benefit of using the handouts provided is that communication can be clearer and they also give participants a practical framework to use as they complete the activity.
Answers to the activities are provided in the answers section (pages 207 to 306). The answers can be photocopied and handed out to participants to reinforce the learning.
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Financial Games for Training
The main formats of activities and games
Individual working
It is advisable to ask participants to work on their own from time to time; for example, by completing puzzles or questionnaires as ‘self-tests’. This is an excellent contrast to group activities and allows time for personal revision and ‘space’ - particularly important aspects for a financial training programme when some participants may not grasp the key points first time round.
Small groups
This format asks participants to work in pairs, trios or in quartets. It is a good idea to change these groups regularly so as to bring in some new personali-ties as well as differing financial experience and expertise. It is difficult to monitor the progress and commitment of more than about four groups of four participants, so 16 participants is the ideal maximum size for a whole group. But this, of course, may not always be possible.
The main group
The whole group can be asked to contribute to a particular activity such as answering a quiz, generating ideas during a brainstorming session and com-pleting a crossword.
Ten ways to get the best out of this book
1. Use the activities with the confidence and knowledge that they have been tried and tested in a wide range of different training courses, events and programmes. The participants have ranged from chief executives to trainees.
2. Be flexible. Experiment and develop your own variations to the activities and games. For example, you might want to take out and/or include addi-tional questions to the quizzes and you might want to think of additional clues for the crossword puzzles.
3. Organize the training by using different formats (working in pairs/trios, working in small groups, working individually and working with the group as a whole). Participants have different learning styles and preferences. They gain more from a variety of formats.
4. Make notes of your experience of facilitating the activities; for example, the time taken and what games worked particularly well and what games need to be changed. Let us know.
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Introduction
5. At the end of each activity, do take time to put together a thorough sum-mary of the most important learning points. Although participants are very willing to ‘play’ the games, they do expect to be given the opportu-nity to raise any outstanding points that they are not quite clear about and they do expect the key messages to be highlighted.
6. The whole point of the book is to help executives and business students learn about accounting and finance in as fun and as rigorous a way as possible. The games have all been designed for that purpose. If you do not have to explain and talk quite so much, do not worry. That is the idea. If you relax, so will the participants. They will enjoy your financial training programme and pass on the good news to colleagues.
7. Follow the principles of‘brain friendly’ learning by letting the participants do as much of the work as possible. For example, ask them for their understanding of activity-based costing, a balance sheet, a profit and loss account, the return on capital employed or discounted cash flow before all is revealed in a game or activity.
8. Introduce a competitive (but friendly) element to the activities - for example, by giving small prizes to delegates who complete a crossword accurately and most quickly or to a team that gets the highest proportion of correct answers in a quiz. For small prizes, think of pads of Post-it® notes, biros, A4 notepads, subject dividers, bottles of wine, a free drink at the bar, pencils, ring binders and a best-selling paperback on a busi-ness subject.
9. If participants are studying for an accountancy qualification, an under-graduate or business school diploma/Master of Business Administration (MBA), the activities can be used as refresher material to supplement conventional revision such as answering past examination questions.
10. Consider using the material to prepare financial training programmes. Take, for example, a selection of activities and games from each of the main sections and they will provide a lot of the ‘core’ content for a com-plete training event.
Acknowledgements
Three people helped to give birth to this book. First, Jonathan Norman of Gower - it was his idea! Second (although he does not know it), Graham Roberts-Phelps. As the author of Health and Safety Games for Trainers (pub-lished by Gower) his book gave me enormous assistance and inspiration. Third, Sara Arnold of Secret Genius® in Winchester. She did all the typing and prepared all the charts and diagrams. Thank you very much to such a distin-guished publishing trio.
I should also like to thank Philip Sadler CBE, a Vice President of Ashridge Business School and Christine Elgood of Elgood Effective Learning. They
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Financial Games for Training
have provided lots of invaluable feedback for which I am extremely grateful. Neil Lasher, Managing Director of Trainer I, was also very helpful with his comments and suggestions.
Finally, much love to my partner, Margaret, who kept encouraging me along the way.
John Kind Winchester
January 2004
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Index by topic
Absorption costing Accounting principles Activity-based costing Balance sheetsBalance sheets and profit and loss accounts -
what goes where?Break-even analysisBudgets and budgetingCash flow and cash flow statementsCostsCosts for decision-makingCost structures‘Creative’ accountingCustomer profitability analysisDouble-entry book-keepingEconomic value addedFinancial forecastingFinancial performance improvementFinancial ratios/indicatorsFinancial general knowledge/terminologyFinancial planningKey factor analysisManagement accounting-techniques and termsOutsourcingPricing decisionsProfit and loss accountsProject appraisal (capital investment decisions)Replacement decisionsStandard costing and variance analysisValue added statements
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Game
402
534,6,8,9,10,12
344,49. 50
5 1 14-19
37,38 46,47
393561
13452
26,3625,27-32
20-243357
42, 58, 59,6048, 54, 55
455, 7, u. 13
63-6756
41.4362
Index by type of game
ANAGRAMS
Game 9 The Bean Scale
Game 30 Cryptics
Participants, working in small groups, have to solve 10 clues to reveal the most important items in a balance sheet.
Participants, working in small groups, have to solve 10 clues to reveal the 10 most important financial indicators/ ratios.
BINGO
Game 7 Housey-HouseyGame 8 Lotto
Participants, working on their own and in competition with their colleagues, have to answer questions about a profit and loss account and a balance sheet using a bingo board layout.
BRAINSTORMING
Game 35 Smoke and Mirrors
Game 36 Brainstorm (or a ‘Thought Shower’)
Game 37 Costorm
Participants, in small groups, have to identify the ways in which companies can ‘adjust’ their financial results for ‘creative’ accounting purposes.
Participants, in small groups, have to identify and then discuss the practical application of six ‘breakthrough’ ideas to improve financial performance from a list of 51 possibilities.
Participants, in small groups, have to generate a list of the different cate-gories of cost and then explain them.
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Index by Type of Game
CARD GAME
Game 51 Budget Builder
CROSSWORDS
Game 2 Nursery Slopes
Game 21 Atticus
Game 32 CrossNumbers
Game 59 Exchequer
Game 61 Blank Squares
Game 66 Decent Proposal
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Participants, working in small groups, are given a pack of cards (each card describes a step in the budget-setting process); they have to decide on the most appropriate sequence of steps for preparing a budget and suggest how the budget process can be made more efficient. Post-it® notes can be used instead of cards.
Participants, working in groups or on their own, are asked to solve a cross-word puzzle the solutions to which reveal the methods/principles used in preparing financial statements.
Participants, working in groups or on their own, are asked to solve a cross-word puzzle the solutions to which reveal important financial terms.
Participants, working in groups or on their own, are asked to solve a cross-word puzzle with a difference; the clues test participants’ understanding of financial ratios by asking for solutions in numbers rather than words.
Participants, working in groups or on their own, are asked to solve a cross-word puzzle the solutions to which reveal important terms/techniques in management accounting.
Participants, working in groups or on their own, are asked to solve a cross-word puzzle the solutions to which reveal the factors influencing the rela-tive profitability of different customers.
Participants, working in groups or on their own, are asked to solve a crossword puzzle using a short
Financial Games for Training
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narrative; the solutions reveal the practical points to be considered in preparing and presenting a case for the approval of a capital project.
DIAGRAMS AND FLIPCHART EXERCISES
Game 3 Rubric
Game 14 Wall Street
Game 27 Puff Limited
Game 49 Line Dancing (1)
Game 50 Line Dancing (2)
JIGSAW PUZZLES
Game 31 Shaping-Up
Game 65 Scrabbling
Participants, working in groups, have to put a collection of balance sheet, profit and loss account terms plus other items into the correct financial statement (a three-part game).
Participants, working in groups, have to identify the principal sources and uses of cash (Part 1); they then have to complete a quadrant diagram to distinguish between cash inflows/(out-flows) from trading and cash inflows/ (outflows) from financing (Part 2).
Participants, working on their own or in groups, are asked to identify 12 finan-cial indicators of particular concern to investors based on the financial information provided.
Participants, on their own or in small groups, have to identify the fixed costs, variable costs, contribution and related measures from a break-even or cost-volume-profit (CVP) diagram.
As Game 49, but using a more challenging CVP diagram.
Participants, working in small groups, have to place incomplete pieces into a blank puzzle to reveal the 10 most important financial indicators/ratios.
As Game 31, but this time for important concepts/issues/techniques in project appraisal.
Index by Type of Game
‘LUCKY’ DIPS
Game 1 Nitty Gritty
Game 42 Pick V Mix
Participants work in groups to practise double-entry book-keeping based on transactions drawn at random and using numbered Post-it® notes picked out of a paper or plastic bag.
As Game 1 but this time as a plenary group and focusing on important cost and cost management terms.
‘MAZE’ PUZZLES
Game 40 St Trinians
Game 41 Wykeham Pharma Pic
Game 53 St Trinians II:As Easy a s ‘ABC’
Game 57 Ningbo Limited
An individual activity: participants have to go through a maze and answer questions/respond to statements about absorption costing so as to arrive at the correct destination.
As Game 40, but this time participants have to answer questions/respond to statements about standard costing and variance analysis, and to reconcile the difference between the actual and budgeted operating profit.
As Game 40, but this time participants have to answer questions/respond to statements about activity-based costing and to work out the ‘ABC’ costs for different products, and then to compare them with the ‘absorption’ costs.
As Game 40, but this time participants have to answer questions/respond to statements about ‘key factor* analysis and come to the correct resource allocation decision.
MULTIPLE-CHOICE AND ‘OPEN’ QUIZZES
Game 24 ‘Who Wants to Participants, in smalt groups and inbe a Millionaire?’ competition with each other, have to
answer a variety of financial general knowledge questions using a board and following ‘Snakes and Ladders’ rules.
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Financial Games for Training
Game 29 Great Expectations
Game 63 Midas Touch
Game 64 Omnibus
NETWORKING
Game 25 Pairing-Up
ODD ONE OUT
Game 58 Black Sheep
Game 67 Misfits
PUZZLES
Game 4 Beijing
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Participants, working individually or in small groups, have to explain the signif-icance of the ‘ups’ and ‘downs’ for 15 financial indicators/ratios. Good news? Bad news? Why?
Participants, individually or in small groups, have to answer 10 questions about the ‘time value of money’ either in a multiple-choice or an ‘open’ question format.
Participants, working on their own or in small groups, have to answer two quizzes, one of 10 questions, the other of 15 questions, to review their understanding of the most important concepts/terms/techniques in project appraisal.
Participants, each wearing a Post-it® note ‘badge’ showing a different financial term, network with colleagues to identify important financial ratios.
Participants, working on their own or in groups, are asked to look at 10 sets of management accounting terms and in each case to decide which one is the odd one out and why.
As Game 58, but this time participants work individually and there are 15 sets o f‘project appraisal/capital budgeting’ terms.
Participants, working on their own or in groups, are asked to prepare a balance sheet based on assorted financial infor-mation some of which is relevant to a balance sheet and some which is not.
Index by Type of Game
Game 10 Squares
Game 12 Merlin
Game 13 Scoop
Game 20 Alphabeta etc.
Game 26 Getting Better Pic
Game 33 Secret Genius* Limited
Game 38 Discriminate
Game 39 Moorgate Limited
Game 60 ‘Inwords’
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Participants, working individually, have to fill in blank spaces based on clues that highlight balance sheet expressions.
Participants, working on their own or in groups, are asked to fill in the blank spaces in 10 sentences by referring to a list of balance sheet expressions/terms.
As Game 12 but this time for a profit and loss account.
A financial general knowledge quiz: 26 letters in alphabetical order are the first letters for clues that reveal important financial terms - an individual activity.
Participants, in small groups, have to work out the 10 most important financial indicators/ratios for a business using a Du Pont diagram; they then have to assess the company’s financial perform-ance using a benchmarking summary.
Using information provided in a diagram, participants, in small groups, have to explain and work out a number of cash flow measures.
Using information provided in a matrix diagram, participants, in small groups, have to classify different kinds of cost into variable, fixed and semi-variable categories.
Using information provided in a matrix diagram, participants, individually or in small groups, have to fill in blank cells by working out variable, fixed and marginal cost information for a com-pany and suggest how the company’s cost structure could be improved.
Working in small groups, participants have to solve 10 ‘management accounting’ clues and insert them clockwise into a diagram.
Financial Games for Training
TEASERS
Game 17 Go-Go
Game 18 Cathedral Enterprises
Game 19 Crystal Ball Pic
Game 44 Lubeoil
Game 45 Finsbury Circus Bureau
Game 46 Richard Osmond Limited
Game 47 Supergrease Pic
Game 48 Slithy Tovesand Mome Raths
Game 52 Stanrow Airport
Participants, on their own or in small groups, and using a set of financial statements have to explain why earning a profit and generating cash are not necessarily the same thing.
Participants, on their own or in small groups, have to prepare a cash flow statement from balance sheet and profit and loss account information.
Participants, on their own or in small groups, have to prepare a cash flow forecast using a matrix diagram.
Participants, on their own or in small groups, have to calculate essential facts about break-even, contribution, variable and fixed costs, and sales volumes using information from a company’s budget.
Participants, on their own or in small groups, have to work out essential information about two companies’ cost structures to arrive at correct pricing decisions.
Participants, individually, have to identify the relevant costs and then decide whether a contract should be accepted or not.
Participants, individually or in small groups, have to consider cost information about three products and decide whether or not one of them should be dropped.
Participants, individually or in small groups, have to arrive at straightfor-ward ‘make or buy’ decisions based on variable and fixed cost information.
Participants, individually first and then in small groups, have to prepare a forecast for an item of expenditure.
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Index by Type of Game
Game 54 Leeder Lingerie Limited (Part 1)
Game 55 Leeder Lingerie Limited (Part 2)
Game 56 CulverManufacturing
TRUE/FALSE QUIZZES
Game 5 Bottom Line
Game 6 Snapshot
Game 15 Hang Seng
Game 16 Lombard Street
Game 28 MasterMind
Game 34 Auntie EVA
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Participants, working in small groups, have to read a short case study and (a) explain the meaning of half a dozen important management accounting terms, and (b) decide whether out-sourcing would be a sensible decision.
As Game 54, but a more challenging outsourcing situation.
As Game 54 but this time the short case study is about a retention/replacement decision.
A 20-question quiz designed to test participants’ understanding of a profit and loss account; they have to decide whether the statements provided are ‘true’ or ‘false’ - an individual or small group activity.
As Game 5, but this time for a balance sheet.
As Game 5, but this time is a 15- question quiz for a cash flow statement.
A 15-question quiz designed to test participants’ understanding of cash flow statements using balance sheet and profit and loss account information; an individual or small group activity.
An individual or small group activity: participants have to answer a 25- question quiz to review their understanding of financial ratios.
Both a true/false and a multiple-choice quiz: individually or in small groups, participants have to answer 15 questions to review their understanding of economic value added.
Financial Games for Training
Game 43 Up to Standard
Game 62 Adding Value
VIGNETTES
Game 22 Buzz Words
Game 23 Footsie
WORD SEARCHES
Game 11 Threadneedle
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Fifteen questions to test participants’ understanding of both costing and standard costing; individual or small group activity.
Ten true/false and multiple-choice questions to review participants’ understanding o f‘value added’; small group activity.
Participants, either on their own or in small groups, have to explain the meaning of financial expressions all taken from the financial press.
As Game 22, but more quotes from the financial press.
Participants, individually or in small groups, have to identify 12 terms in a profit and loss account; they then have to place the terms in the correct sequence and work out some missing figures.
Section i: Games 1 -2 4
Nitty Gritty
Double-entry book-keeping exercise
Format: Small groups for Parts 1 and 2. Individual assignments for Parts 3 and 4.
Part 1 can be completed as a ‘stand-alone’ exercise. Parts 2 and 3 should not be completed unless Part 1 has been done first. Part 4 can also be completed as a ‘stand-alone’ exercise.
Time: Part 1 will take up to 40 minutes. Part 2 is rather more extensive and may take a couple of hours altogether, but break it into shorter chunks. Part 3 will take about 20 minutes. Part 4 will take quarter of an hour.
Learning Objective: To practise double-entry book-keeping by seeing how‘T’ accounts work, to prepare a trial balance and then to prepare a profit and loss account and balance sheet.
Resources: Flipcharts and pens, Post-it® notes and Blu-Tak. Copies of all the transactions (pages 7 ,8 and 9). For suggested answers see pages 209 to 217.
Learning Process: Part 1
1. Mark 10 Post-it® notes, 1 to 10. Fold them up and put them in a small bag. The numbers refer to the accounting transactions described on page 5.
2. Organize the group into teams, for example, according to the alphabetical order of the first names of the participants.
3. Hand out copies of Winton Limited (Part 1), see page 5.
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Financial Games for Training
4. Go to one of the teams and ask a team member to take one of the Post- it® notes from the bag and call out the number. The transaction appropri-ate to the number is then read out. The team have to agree on how the transaction should be recorded. Which account should be debited? Which account should be credited?
5. Once the team has given its reply, ask the other teams if they agree with the answer. If not, why not?
6. When the correct answer has been agreed, write up the relevant T accounts and put in the transaction details on flipcharts or on a white-board.
7. Move on to a different team and repeat steps 2-6 until all 10 transactions have been recorded in the appropriate T accounts.
8. Now ask the teams, (1) to work out the debit/credit balance on each of the T accounts and, (2) to write up the complete list of T account bal-ances on a flipchart. Once this has been done, confirm that the teams’ debit and credit balances equal each other! Mention that this list is called the ‘trial balance’.
9. Once the trial balance has been agreed, get the teams to identify the accounts that produce the profit and loss account and the accounts that produce the balance sheet.
10. Based on 9, ask the teams to prepare Winton’s profit and loss account for its first full financial year and its balance sheet at the year end.
11. Get one team to present the profit and loss account and a different team to present the balance sheet.
12. Summarize the main points. Consider moving on to the more advanced assignment (Part 2).
Learning Process: Part 2
This is similar to Part 1:
1. Mark 15 Post-it® notes, 11 to 25. Fold them up and put them in a small bag. The numbers refer to the accounting transactions described on page 7.
2. Organize new teams.3. Go to one of the teams. Ask a member to take out one of the Post-its® and
call out the number. Then read out the transaction appropriate to the number.
4. Get the team to describe how the transaction should be recorded. Which account should be debited? Which account should be credited?
5. Ask the other teams to confirm or change the first team’s response.6. When the correct answer has been agreed, write up the relevant T
accounts on flipcharts/a whiteboard and put in the transactions.7. Now move to a different team and repeat the process until all 15 transac-
tions have been dealt with.
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Section i: Games 1-2 4
Take a 10 minute ‘stretch’ break.
Get everyone to stand up and network into pairs/trios.Ask the pairs/trios to prepare a trial balance based on the T accountbalances. This should be done on flipcharts. Use Blu-Tak to stick flipchartsto the walls of the training room.Get one of the pairs/trios to present their trial balance. Ensure that it iscorrect and that the other pairs/trios agree with and understand how the presenting team’s trial balance has been worked out.
Take a further short break.
Ask the pairs/trios to identify the profit and loss account and then the balance sheet accounts and balances.Select one of the pair/trios and ask them to present their answers.Facilitate a debrief to ensure that the answers are correct and everyoneunderstands how they have been arrived at.Organize the group into new pairs/trios. Perhaps use height as the criterion, although this leads to a danger of all female groups! Get the new teams to prepare Winton’s profit and loss account for its second financialyear and its balance sheet at the end of the second year.Select a team to present the profit and loss account and a different team to present the balance sheet.Finally, summarize the main points that have come out of the whole exercise. Clarify any remaining issues.
Take a well earned rest!
Learning Process: Part 3 (Part 3 is an optional extra)
1. This is an individual exercise.2. Make sure that Winton’s ‘End of year 2’ balance sheet is written up on a
flipchart or overhead projection/slide for everyone to use.3. Get the participants to make the changes needed to Winton’s ‘End of year
2’ balance sheet so as to come up with a new balance sheet at the end of January in year 3 based on the five transactions on page 9.
4. Ask different individuals to go through the transactions to see how the balance sheet changes after each one. Record the impact of the changes,one by one, on the end of year 2 balance sheet.
5. Provide explanations as necessary.
5
Financial Games for Training
Learning Process: Part 4 (Part 4 is another optional extra)
1. Ask the participants to answer the following quiz by writing the questions on a flipchart. It is based on Winton’s revised balance sheet on page 217, from Part 3.
(a) What is the company’s capital employed?(b) What is the level of working capital?(c) What is the company’s current ratio?(d) What is the ‘acid-test’ ratio?(e) What is the debt-equity ratio?
2. Answering the questions could be an individual assignment for 10 -15 minutes.
3. Facilitate a debriefing session.
6
Nitty GrittyPage 1 of 3
Section 1: Games 1 -2 4
Winton Limited (Part 1)
Accounting transactions during its first financial year:
1. Several shareholders purchase shares in a new company, Winton Limited. The company receives £60 000 cash from shareholders. The shares are issued at £1 each.
2. Winton buys premises for £20 000 cash and stock for £20 000 cash.
3. Winton sells stock for £8000, (£4000 for cash and £4000 on credit). The stock cost is £4500.
4. Winton buys stock costing £10 000, on credit, from its main supplier.
5. Winton sells stock for £6000 on credit. The stock cost is £3000.
6. Winton receives cash of £4000 from the credit sale in transaction 3.
7. Winton sells stock for £12 000 on credit. The stock cost is £6000.
8. Winton pays £10 000 for the stock purchased in transaction 4.
9. The company pays £7000 for its cash operating expenses: salaries and wages, advertising and promotion and utility charges.
10. Winton borrows £15 000 at 10 per cent a year on the last day of its first financial year. The agreed period of the loan is five years.
Note: Ignore VAT for Part 1. The financial years for all Parts are the same as the calendar year.
Reproduced from john Kind, Financial Games for Training, Gower Publishing, Aldershot, 2004 7
Financial Games for Training
Nitty GrittyPage 2 of 3
Winton Limited (Part 2)
Accounting transactions during its second financial year:
11. The company buys stock costing £15 000 plus VAT from its supplier on agreed credit terms.
12. Winton incurs £12 000 of operating expenses plus VAT. Fifty per cent paid straight away in cash. Fifty per cent will be paid later.
13. Plant and machinery costing £10 000 plus VAT is purchased on credit. The equipment concerned has an estimated commercial life of four years.
14. The unpaid operating expenses, in transaction 12, are paid for in cash.
15. Winton sells stock for £16 000 plus VAT on credit. The stock cost is £9000 plus VAT.
16. The bank charges interest of £1500 on the loan and Winton repays £3000 of the outstanding loan of £15 000.
17. The estimated corporation tax payable nine months after the end of Winton’s second financial year is £4500.
18. Operating expenses paid in advance and relevant to the next financial year come to £2000 plus £300 VAT.
19. Additional operating expenses are incurred. They come to £6500 plus VAT of £500 and will not be paid in cash until early in the next financial year.
20. Winton proposes to pay a dividend of £1000 in January of the next finan-cial year.
21. Winton sells stock for £40 000 plus VAT on credit. The stock cost includ-ing VAT is £23 500.
22. Customers pay cash of £18 000 - see transaction 5 and transaction 7 on page 5. Customers also pay cash of £65 800 - see transaction 15 and transaction 21.
23. Stock costing £1800 excluding VAT cannot be sold because it has been damaged.
24. Winton sells stock for £50 000 plus VAT on credit. The stock cost exclud-ing VAT is £30 000.
25. Winton’s chief accountant notices that the operating expenses have been overstated by £470 including VAT and purchases from suppliers under-stated by £470 including VAT. Winton pays its trade creditors £63 450.
Reproduced from John Kind, Financial Games for Training, Gower Publishing, Aldershot, 20048
Section i: Games 1 -2 4
Nitty GrittyPage 3 of 3
Winton Limited (Part 3)
Accounting transactions during the first month of the company’s third financial year:
26. A firm of chartered surveyors complete a valuation of Winton’s premises. They say that they are now worth £30 000.
27. In view of Winton’s ambitious expansion plans, the directors decide to issue 10 000 more shares at a price of £1.50 per share.
28. The dividend of £1000 is paid in cash.
29. Two of Winton’s customers - one owing £750 and the other owing £8000 - are in financial difficulties. They are unlikely to pay Winton.
30. The outstanding VAT is paid to Customs and Excise.
Reproduced from John Kind, Financial Games for Training, Gower Publishing, Aldershot, 2004 9