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Bye-Bye Balance Sheet

The way we teach accounting hasn’t changed all that much since double-entry bookkeeping was dreamed up by an Italian monk in the 15th century. For non-accounting majors, that dream seems more like a nightmare as they stumble through balance sheets, income statements and cash flow charts in an elusive and often non-intuitive quest to balance debits and credits.

It doesn’t have to be that way, says Dr. Helmut Hergeth, an associate professor of textile and apparel technology and management.

“The best form of learning is if you don’t notice that you’re learning,” he says.

Look and Learn

Dr. Helmut Hergeth helps students and businesses visualize accounting principles.

To prove his point, Hergeth uses a game called “Income/Outcome” to help students quickly and easily grasp the fundamentals of accounting. Instead of creating financial reports in a spreadsheet, students place color-coded stacks of chips – representing cash, assets and inventory – on different areas of the board.

It’s not hard to compute a company’s debt-to-equity ratio using the game, Hergeth says. You just compare the number of red stacks to the number of black stacks in the bottom area of the balance sheet.

“It’s very fun and very tangible,” he says. “And you don’t need a calculator.”

Flight Simulator for Business

Hergeth has used the game in upper division business courses, the Entrepreneurship Initiative and workshops offered through STEP, a summer program that recruits rising seniors into the College of Textiles. He also facilitates daylong workshops for business clients as a consultant for Andromeda Training, the company that created the game.

Income/Outcome is a business visualization tool.

The use of business visualization in the corporate world is rewarding, he says, because it helps employees across departments understand how their work contributes to the bottom line.

“It’s a flight simulator for business,” Hergeth says. “It helps you see how a decision in marketing impacts production, for example. It shows you that business success isn’t based on chance, it’s based on the decisions made by a team of people.”

The German Academic Exchange Service recently named Hergeth a research ambassador for 2010-11. Prior to joining the faculty in 1991, Hergeth worked in the textiles industry in the United States and Germany as a researcher, export manager, marketing manager and financial forecaster.

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