Colorado Agriscience Curriculum
Section: / Intro to AgribusinessUnit: / Agriculture Business and Employment Experience
Lesson Title: / Compiling a Balance Sheet
Colorado Ag Education Standards and Competencies / Standard 9.2 The student will prepare and implement plans for an agricultural business or employment experience.
Competency 2-6 The importance of compiling a balance sheet.
Colorado Model Content Standard(s): / Math Standard 2.2: Represent functional relationships using written explanations, tables, equations, and graphs, and describing the connections among these representations.
Student Learning Objectives: / Objective 1: The student will define what a balance sheet is.
Objective 2: The student will list the reasons why a balance sheet is important.
Objective 3: The student will compile a balance sheet
Time: / 50 Minutes
Resource(s): / Farm and Ranch Business Management, John Deere. T-Bird Record Book.
Instructions, Tools, Equipment, and Supplies: / Italicized words are instructions to the teacher, normal style text is suggested script.
*Copy PowerPoint Slides 2, 3, 14, and 15.
Interest Approach: / First divide the class into two groups. Have one group be the asset group and one group be the liability group. Give the asset group PowerPoint slide 2. Give the liability group PowerPoint slide 3. Have the students work together to classify the assets and liabilities into current and non-current portions. Have the students classify each by writing its classification next to the asset or liability.
Today we are going to learn about balance sheets and why they are important. But first we need to review current and non current assets and liabilities since you all should be experts at this point and time. I am going to divide the class into asset and liability groups and then hand each group a paper. Each group will then classify each asset and liability by writing its classification beside it. Once I have designated the groups and handed out the paper I will let you start.
Decide groups and hand out papers.
Now that you are set you may start.
Once students have classified each group go through PowerPoint slides 4-9 to review. Answer questions regarding current and non-current as they arise. Make sure students know that current means assets that should be used up within one year or liabilities that must be paid by the end of the year. Non current assets are those that have a useful life of more than one year. Non-current liabilities are debts that are due beyond the current year.
Now that we have classified these assets and liabilities why would it be important to put these in a balance sheet and study these numbers?
Yes, we want to find our net worth or how much equity we have in our business. This basically tells us how much of our business or SAE we actually own.
Objective 1: / Objective 1: The student will define what a balance sheet is.
Show PowerPoint slide 10. Read the definition and have students write the slide down in their notes.
I. Balance Sheet – A balance sheet shows the financial condition of a business at a particular point in time. It lists all assets, values of assets, and liabilities of the business. It is also known as a net worth statement, financial statement, or statement of financial condition.
Now you need to use a me, you, us moment. Pose the question, have students individually write an answer to the question, and then have the students share their individual answers with their neighbor, and then have each pair share their thoughts with the rest of the group.
Now everybody get a piece of paper out. I want each of you to write out an example of the question I am going to ask you. I want each of you to think of one asset and liability in your SAE program. I will give you 1 minute to complete this step, go.
1 minute is up. Now, when I say go I will give you 1 minute to share your asset and liability example with your neighbor to the right. Go.
Stop. Now when I call on you, I want you to share your examples with the rest of the group.
Thank you, those were all very good examples
Objective 2: / Objective 2: The student will list the reasons why a balance sheet is important.
Show PowerPoint slide 11 and students write notes in their notebook. Read the information and explain as you go along.
I. Reasons why a balance sheet is important
A. Balance Sheets list all assets and liabilities in order to calculate net worth. Net worth is calculated by taking assets minus liabilities.
B. A balance sheet once complete allows for financial analysis of a business. There are three types of financial analysis they are comparative analysis, projected analysis, and ratio analysis.
C. Comparative analysis compares figures from the same dates each year.
D. Projected analysis is done by making balance sheets for the future for expected farm situations and analyzing them to see probable trends.
E. Ratio analysis is used to measure the financial condition of one business against another.
Now that you have completed your notes in this section, let’s look at our PowerPoint example to figure out net worth in our example.
Objective 3: / Objective 3: The student will compile a balance sheet.
Now that we have completed note taking it is time to complete a balance sheet on our own. But first it is important for you all to learn how to calculate net worth. Let’s refer to the PowerPoint slide 12.
Show the PowerPoint and explain as you go along. Students must get that Net Worth or Owners Equity equals assets minus liabilities. Once they have that move on to the following example so they can do their own balance sheet. Use the information in this section and also on the PowerPoint to present this example to the students. Pass out a copy of PowerPoint slides 13 and 15. Have students do work first and then show answers for both activities.
I. Classify the following assets and liabilities as: Current Asset (CA), Non-Current Asset (NCA), Current Liability (CL), and Non-current liability (NCL)
A. Machinery – 32,500 ______
B. Cash – 1000 ______
C. Land – 25,000 ______
D. Cows – 10,000 ______
E. Loan – 10,000 ______
F. Loan due - 2,000 ______
G. Calves – 3,000 ______
Once you complete the classifying of assets check answers with PowerPoint. Once answers are right, have students insert into the net worth statement PowerPoint example. Once student are done review answers with PowerPoint Net Worth Statement answers.
Review/Summary: / Now that we have completed the balance sheet, when I say, “Go,” I want each of you to turn to your neighbor and tell each other three things you learned today. I am going to give you one minute to exchange ideas then you will each share them with the group, “Go.”
Application--Extended Classroom Activity: / Have students make their own farm balance sheet to bring to class tomorrow. Have students compare each other’s businesses and point out that they are doing comparative analysis.
Application--FFA Activity: / Encourage students to be on a farm business management team.
Application--SAE Activity: / Have students fill out their own balance sheet in their SAE record books.
Evaluation: / In class have each student create their own simple balance sheet evaluating the assets and liabilities of their own SAE program. You can even assign this as homework as each students should be different. Make sure students assign values to their assets and liabilities.
Evaluation Answer Key: / Each balance sheet will be different and should be evaluated independently.
Unit 2, Lesson 6: Compiling a Balance Sheet 1