Hanson and Phillips (2006) provide evidence that using analogies can be a powerful method for teaching accounting concepts. Prior research (Gentner 1989; Ross 1984) has shown that people often develop analogies that share superficial similarities between the source topic (what the student already knows) and the target topic (what the student is attempting to learn). When students first learn about business balance sheets, they often draw upon their pre-existing knowledge and form an analogy between the business balance sheet and personal net worth. This choice can be very helpful, but part of their pre-existing knowledge does not apply to the business balance sheet. Zook (1991) has demonstrated that students may focus on irrelevant features when analogies are used. Thus, it is important that students understand the parts of the analogy that can be helpful.
Paris and Glynn (2004) demonstrate that analogies are more effective when they are elaborate. Elaborate analogies fully elaborate on the structural features of a target
topic that are also present in a source topic. They show that elaborate analogies contribute to students’ more fully comprehending new concepts. This paper describes an
elaborate analogy that may be used during the first week of a first financial accounting course to help students understand fundamental accounting concepts. This analogy is used in the form of two related in-class exercises that may be used in a single day or used on separate days.