Place a large number of golden beads in various hierarchies in a pile in front of the child. They should all be mixed up. Say to the child, "We have a lot of beads don't we? Why don't you count and see how many we have." The child will discover that in order to count he will have to sort the beads, and you should allow him to do so without interference.
Have the child start counting the beads. She should begin with the unit beads, and they can be counted into the lid of a box or other container to avoid miscalculation and losing the beads. When the child reaches ten unit beads, point out that she can exchange those ten unit beads for an additional ten bar. This ten bar should be placed above the other ten bars to show that it was obtained by exchanging rather than as part of the original number. This will introduce the idea of "carrying numbers" although you will not point it out at this time. This can be done each time ten unit beads are counted out.
Perform the exchanging process with all of the ten bars and hundred squares also. Everything obtained by exchanging should be placed above the original group. When you are done, you will have a simplified version of the number that you started out with.
Count the new, simplified number. The child should count the new number once every exchange possible has been made. Make sure that he understands that the old pile and the new pile are the same number.
Practice the exercise several times with different combinations of beads. This will demonstrate in a real, physical manner how and why numbers can be carried.