Using role play to teach accounting transaction cycles

How role play in accounting education creates an effective and engaging lesson about a topic that can feel very dry. This example uses a case study to explore the processes involved in simple transaction cycles.

Diagram showing the four processes of the transaction cycle: order, supply, invoice, payment.

I introduced this activity in an Accounting Information Systems (AIS) course for first-year undergraduates studying for an Accounting and Finance degree. It would also work effectively in more general accounting modules or within audit and assurance.

Case study and background

The case consists of a hypothetical customer, Johnson University which is all set to begin a new academic year. The university requires office supplies for its day-to-day activities. The purchasing department at the university chooses Spectacular Corporation as their preferred supplier.

My class was quite large as we had 48 students. I divided them into equal-sized groups and allocated one group to Spectacular Corporation and the other to Johnson University. The members of each group were then required to divide themselves into “departments” each responsible for one of the four stages of the process.

The activity took about 80 minutes (including 20 minutes of reading and discussing the script).

At the end of the term, students prepared a report on their specific role in the activity. This enabled students to revisit the activities performed in class and provided an opportunity for recall, and hopefully retention, of their learning.


The diagram above is provided to the students, indicating the processes involved in the transaction cycles from a revenue and purchasing perspective.

I also provide students with a script (outlined below), together with examples of source documents. The source documents contain details of the quantity and price of goods ordered by Johnson University.

In a “real” situation, accounting software generates documents but in the role play students pass the paper documents between themselves.

Lesson outline

Ordering goods

The warehouse staff at Johnson University have the authority to maintain certain items of inventory at a specified level. They notice that more office supplies are needed.

The warehouse team sends a purchase requisition to the purchasing department for 1,000 pens, 300 reams of paper, and 5,000 markers.

The purchasing department conducts a supplier survey. They look at past customer reviews, and choose Spectacular Corporation on the basis of quality and price.

The team agrees on a price of £2,000 with Spectacular Corporation, which is a good deal.

The purchasing department generates a purchase order and sends this to Spectacular Corporation.

The sales department at Spectacular Corporation uses the purchase order from Johnson University to create a sales order/confirmation.

The accounts receivable department evaluates the creditworthiness of Johnson University. The credit limit of Johnson is £10,000 and if the existing amount owed by them is more than this, the accounts receivable department will not process the order.

The accounts receivable department approves the order and sends the sales order/confirmation to the warehouse.

Supplying goods

The warehouse staff at Spectacular Corporation check the availability of inventory. There is sufficient inventory to fulfil the whole order.

The warehouse staff use the sales order/confirmation as the basis for creating a picking note.

They despatch the goods to Johnson University, along with a despatch/delivery note specifying the quantity of goods and Johnson University’s purchase order number.

They pass the despatch/delivery note to the accounts receivable department.

The warehouse staff at Johnson University check the goods received against the original purchase order to ensure that the correct quantities and items have been received.

They generate a goods-in note which updates the inventory records and notifies the accounts payable department that Spectacular Corporation has delivered goods.

Invoicing for goods

As soon as the goods are despatched, the accounts receivable department at Spectacular Corporation sends the sales invoice to Johnson University.

Johnson University receives the invoice and it is passed to a member of the accounts payable department. He or she matches it to the purchase order and goods-in note and then posts it to the accounting records.

An authorised person approves the invoice and schedules it for payment according to the agreed credit terms.

Cash settlement

The cash payments department at Johnson University instructs its bank to send cash to Spectacular Corporation by bank transfer.

They send a remittance advice to Spectacular Corporation confirming that a payment has been made. The remittance advice also indicates which invoices have been settled.

The accounts receivable department at Spectacular Corporation check that the cash arrives safely from Johnson University.

They use the remittance advice to post the cash receipt to the accounts receivable account marking the specific invoice(s) as paid.

Student feedback

The role play had a positive impact on the learning of the students. From the feedback gathered after the session, one student stated that:

The activity gave me a practical understanding of the topic.

Another said:

This activity helped me to apply the learning. I was able to understand and generate the source documents in Xero [accounting software].

Along with the feedback, the responses in a class test compared to one taken earlier showed improved comprehension of concepts related to transaction cycles.

Pedagogical benefits of role play

My experiences are consistent with the literature on role play in educational settings. I specifically noted these benefits identified by Powell (2020):

  • It was effective in improving students’ understanding of aspects of the transaction cycles.
  • Students were able to bring their own experiences and understanding of context into the classroom, fostering student-centred learning and creativity.
  • It encouraged teamwork, communication and other interpersonal skills.
  • This activity required students to step outside of their comfort zone which was difficult for some but also allowed them to show creative abilities.
  • I saw greater motivation and engagement from students.

About the author

Huma Shaafie
Huma Shaafie

Huma Shaafi is a lecturer in Accounting and Finance at Middlesex University Dubai. She works with students from diverse nationalities and backgrounds, and believes that in-class participation and interaction among culturally diverse groups fosters confidence and understanding.

She loves to develop innovative teaching techniques for the most tedious accounting concepts.

Outside the classroom, Huma mentors students within marginalized communities in her hometown of Kashmir.

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References and further reading

O’Callaghan, S., Elson, R.J., Walker, J.P. (2020) Using role play as an experiential learning tool to introduce students to auditing. ABD Journal, Volume 4, Number 2, pp. 1–24.

Lim F.P. (2013) Impact of information technology on accounting systems. Asia-pacific Journal of Multimedia Services Convergent with Art, Humanities, and Sociology, Volume 3(2), pp. 93-106.

Powell, L., Lambert, D., McGuigan, N., Prasad, A., & Lin, J. (2020) Fostering creativity in audit through co-created role-play, Accounting Education, 29:6, 605-639, DOI: 10.1080/09639284.2020.1838929

Romney, M.B., Steinbart, P.J., Summers, S.L, Wood, D.A. (2020) Accounting Information Systems 15th Edition. Pearson Higher Education; 2020 July.

This is part of the Pedagogy series of articles

© Accounting Cafe

3 thoughts on "Using role play to teach accounting transaction cycles"

  1. Dr. Harris Ishtiyaq says:

    Very informative and interesting article indeed.
    Very well written, cleared a lot of my concepts regarding conducting classes and using practical scenarios to do so

  2. Zohra says:

    Great article! Seems like a very interactive and engaging way of learning accounting principles. Wish I had this in my accounting class 🙂

  3. Madeeha says:

    Very Informative and creative way of teaching accounting, loved the creativity with this project as accounting can be viewed as boring.
    More of such concepts must be introduced to keep students engaged, new age accountancy training.

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