INCOME STATEMENT AND BALANCE SHEET LESSON PLAN

 

Teaching Materials

• Lesson - Linking the Income Statement and Balance Sheet (see below for printable lesson)

• Linking the Income Statement and Balance Sheet

• Copies of an Annual Report from a well-known company.

Lesson Activity

Understanding the balance sheet and its relationship with the income statement is an important concept in accounting. This lesson introduces the relationship and is a precursor to the next two lessons which look at each statement and associated accounts in more detail

1. Have students look at the Financial Statements prepared in the annual report.

2. Discuss the various income statement Accounts

• Look at the types of revenues.
• Discuss the various expenses.
• Discuss net income and explain how it is calculated.
  

3. Discuss the various balance sheet account entries

• Look at each section (assets, liabilities, equity) in detail.
• Briefly discuss the entries and explain concepts such as depreciation, accrued liabilities, and retained earnings.

4. Have students identify the common link between the balance sheet and the income statement: earnings

5. Discuss where earnings are shown on the balance sheet and what earnings represent: an increase in the equity of the company.

Assessment/Evaluation

Have students complete worksheet. A suggested passing grade is 70% or greater.

 

 

 

Lesson Printable Materials - Worksheets

Print out the teaching lesson pages and exercise worksheets for use with this lesson:

 

LINKING THE INCOME STATEMENT AND BALANCE SHEET LESSON
	Linking the Income Statement and Balance Sheet * This is a lesson on the purpose of the Income Statement, the Balance Sheet, and how they can be used together.
ACCOUNTING WORKSHEET - STUDENT EXERCISE
	Linking the Income Statement and Balance Sheet Worksheet * Student worksheet based on the above lesson.
	Do you have a recommendation for an enhancement to this accounting lesson, or do you have an idea for a new lesson?  Then leave us a suggestion.
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