Build the Balance Sheet and Retained Earnings
To equip students with the ability to prepare and interpret a balance sheet and explain how income affects equity, completing the two-statement link before cash flow is introduced.
- ▶Construct a balance sheet that correctly groups assets, liabilities, and equity
- ▶Explain how net income flows into retained earnings and connects the income statement to the balance sheet
- ▶Verify that assets equal liabilities plus equity after every build
This lesson follows a structured 6-phase learning model designed for authentic project-based learning.
Hook
Reconnect to Lesson 02 income statement and surface the friction point: profit alone does not tell you what the business owns or owes.
Introduction
Name the method, model the balance sheet step by step, show the retained earnings roll-forward, and walk through a worked example with mini balance-sheet representations.
Guided Practice
Add a meaningful complication (retained earnings links, dividends, or ambiguous classifications), reduce prompts, and shift toward authentic accounting notation.
Independent Practice
Repeated balance sheet construction practice with varied numbers, automatic checking, feedback after submission, and a mastery target.
Assessment
Short MCQ exit ticket on balance sheet construction, retained earnings logic, and common misconceptions.
Closing
Reflect on confidence and understanding, connect to the business problem, identify method signals, and preview the cash flow statement lesson.