Most 5-year-olds have basic language comprehension, also known as receptive language. If you tell them to sit in the blue chair or get you the milk, they can do it easily. But can they figure out an unknown word from the context of your sentence? Or make connections between two stories they've heard? Those are the language comprehension skills 5-year-olds need to work on to prepare them for the reading comprehension activities they'll be doing in a couple of years.
Reading aloud is the best language comprehension and reading comprehension activity. Even math skills can be improved through reading aloud. For language comprehension, the focus should be on learning new vocabulary words from the text and drawing conclusions from the pictures. Asking questions as you read and encouraging kids to ask their own questions are also ways to improve language comprehension through read aloud.
Act It Out
If you really want to see whether children understand a read-aloud, have them act it out. Five-year-olds can do it as a small group or create puppets and act out all the characters themselves. If the entire story is too long, just have them perform a small section of it. You'll be able to see whether they incorporate vocabulary from the story, how they interpreted the characters and plot and whether you should sign them up for acting classes.
For a 5-year-old who loves to draw, lots of language comprehension activities are available. Kids can draw what they think will happen next in a story, for example. They can also draw the meanings of new vocabulary words, either from the context of the story or from a definition you've read to them. Another option is to have them create their own stories through pictures and have you write the words. For those kids already worried about their drawing skills, or lack thereof, cutting pictures out of magazines can work as well. But really they should just draw stick figures like the rest of us.
Hunt for Treasure
This is one of those activities that your child won't even realize is a language comprehension activity. You can use it for holidays and other special days to continue learning even when you are celebrating. Hide a present in your home or yard, then give your child verbal clues about where it is. Start out simply, with just one or two clues, then gradually move on to more complex descriptions and complicated hiding places. If your child struggles with verbal clues, supplement them with pictures. You can take a photo of an area near the hiding place with your cell phone camera and then show the picture while saying the verbal clue. Presents are excellent motivators!