Kandi has degrees in Communications, Human Services, Education and Computer Science. She is a Business, Marketing, and Technology instructor with a Master's degree in Education.
Students will be able to:
- Understand and apply correct vocabulary for creating and using a balance sheet.
- Balance a balance sheet.
- Determine where discrepancies may exist if balance sheet does not balance.
Length of Lesson
1 to 2 hours
Use units as a way to understand problems and to guide the solution of multi-step problems; choose and interpret units consistently in formulas; choose and interpret the scale and the origin in graphs and data displays.
Define appropriate quantities for the purpose of descriptive modeling.
- Calculators (optional)
- Vocabulary list
- Sample completed balance sheets
- Sample incomplete balance sheets
- Sample list of liabilities
- Sample list of assets
- Sample list of owner's equity
- Balance sheet
- Owner's equity/net worth
- Accounts receivable
- Begin by asking students to explain how a balance sheet works. You can use a comparison to a checkbook sheet and bank statement to help them relate to the concept. Use this discussion to introduce the vocabulary words.
- Show students samples of balance statements.
- Indicate where liabilities, assets, and owner's equity would be entered. Demonstrate the procedure for balancing the sheet.
No Errors Balancing Activity
- Give each student a list of vocabulary words to refer back to during the activity.
- Make sure students have pencils.
- Provide each student with a sample incomplete balance sheet.
- Next, give each student a list of assets and liabilities to place in the sheet.
- Instruct students to place these in the sheet where they belong.
- When students have finished entering their numbers, direct them to calculate if the sheet balances.
- Ask them to review the sheet when completed and discuss:
- Did your balance match the bank statements?
- Is each asset and liability accounted for on the sheet?
- Were there any numbers you weren't sure where to place them?
Error Balancing Activity
- Use the same steps as the No Errors Balancing activity, but provide students with a statement with one or two additional assets or liabilities not listed on their list.
- Ask students to review their sheet and find where the difference in balances between statement and sheet arises.
- Discuss as a class:
- How did you find the errors?
- What did you need to do to make the balances match?
- What problems could arise if an imbalance happened for a real business?
Balance Sheet Bonus Activity
- Divide students into groups.
- Pass out completed balance sheets to students.
- Ask the students to evaluate the data in the balance sheet.
- In a presentation, address the following questions:
- How much debt does the company have?
- Does the company have enough equity?
- Have they invested in equipment/technology?
- How much money do others owe them?
- Are there potential financial problems in the future based on the current information?
Divide students into groups. Tell them they are a small business, and they must create a balance sheet for their company. Have students share their sheets with the class. They should be able to justify their assets, liabilities, and owner's equity.
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