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EconEdLink: Understanding a Balance Sheet
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Activity Description
In this activity, students learn the components of a balance sheet by working through many problems to strengthen their understanding. Students complete a balance sheet for business by entering the names of the accounts and calculating total assets, liabilities, and net worth. Students then make predictions on how the balance sheet changes when there are changes to assets and liabilities.
EconEdLink has financial literacy lessons written for K–12. They also provide access to the latest economic news and information. Choose Current Events on the "educator" menu to learn more about what is happening in the world of economics and access related lesson plans. Links to economic data resources can also be found on the "educator" menu. Take time to look this one over, including both the educator section and the student section.
Preparation
- Make sure that the sites are not blocked at your school.
- Review the detailed lesson plans and other needed resources.
- Download the worksheet and template.
- Make students copies as needed. If possible, download the template to computer desktops.
How-To
- Introduce the lesson and why it is important.
- Have students go to the College-Cram.com Web site and study the balance sheet. Students will need to select the To Learn More tab.
- Have students download or open the template.
- Discuss the three parts of the balance sheet.
- Change the components of the balance sheet so that students can see how changes to assets and liabilities affect net worth.
- Discuss the accounting equation.
- Check for understanding by having the students complete the Balance Sheet Worksheet
Teacher Tips
If you do not have Microsoft Excel, you can download Open Office for free or use Google Docs spreadsheet program.
More Ways
Browse EconEdlink online economic and personal finance lessons by Lesson Type, Concept, Standard, Grade, Interactive Resource, Author, or Word Search.
Program Areas
- ASE: High School Diploma
- ABE: Adult Basic Education
- ASE: High School Equivalency Preparation
Levels
- High
Lesson Plan
- Begin with a brief discussion of financial statements and their importance in business.
- Show a short video or presentation explaining the purpose and components of a balance sheet.
- Interactive Activity: Use a digital polling tool (e.g., Mentimeter, Kahoot) to ask students what they know about balance sheets and why they might be important for businesses. Display the results in real time.
Clearly state the lesson objectives:
- Students will learn the components of a balance sheet.
- Students will practice entering account names and calculating total assets, liabilities, and net worth.
- Students will predict how changes in assets and liabilities affect the balance sheet.
- Students will understand the importance of learning to use a balance sheet.
- Explain the three main components of a balance sheet: assets, liabilities, and net worth.
- Use a real-life example or a sample balance sheet to illustrate each component.
- Introduce the accounting equation: Assets = Liabilities + Net Worth.
Interactive Activity: Use a smartboard or interactive whiteboard to demonstrate how to fill out a balance sheet using a template, showing step-by-step calculations. Invite students to come up and input values.
Activity 1: Group Balance Sheet Creation (check website for Resources)
- Divide students into small groups and give each group a different set of account names and values.
- Have each group create a balance sheet on paper or using a computer.
- Collaborative Activity:
- Encourage students to discuss and agree on the placement of each account under assets, liabilities, or net worth.
- Use a collaborative tool like Google Sheets for groups to work together in real time.
- Circulate the room to provide assistance and answer questions.
Activity 2: Individual Balance Sheet Worksheet
- Provide students with a worksheet that contains a list of account names and values.
- Have students complete their balance sheets independently.
- Include questions that require students to predict how changes in specific assets or liabilities will affect the overall balance sheet.
- Interactive Activity:
- Use an online platform like Edmodo or Google Classroom to submit and review worksheets.
- Review the completed balance sheets from both the group activity and individual worksheets.
- Conduct a quick quiz or exit ticket with questions on the key components of a balance sheet and the accounting equation.
- Interactive Activity:
- Use an online quiz tool like Quizizz or Socrative to create the quiz.
- Provide immediate feedback to ensure understanding.
- Discuss current economic events or trends that might impact a company's balance sheet.
- Interactive Activity:
- Have students use the EconEdLink website to find recent articles or data related to financial statements.
- Use a discussion forum or breakout rooms in Zoom/Google Meet for students to present their findings and relate them to the balance sheet concepts learned in class.
Documents
- Understanding a Balance Sheet.png - Screenshot of the Understanding a Balance Sheet lesson
Subjects
- Electives
- Career Exploration
- Math
- Whole Number Skills
- Mathematics
- Numbers and Operations on Numbers
- Social Studies
- Economics
Standards
- Operations and Algebraic Thinking
- 1.OA.2 - Represent and solve problems involving addition and subtraction.
- 1.OA.3-4 - Understand and apply properties of operations and the relationship between addition and subtraction.
- 1.OA.7-8 - Work with addition and subtraction.
- Measurement and Data
- 3.MD.3-4 - Represent and interpret data.