#PLENK2010 I want to draw your attention to a wonderful project of the Lieutenant Governor of BC. He is trying to encourage kids and adults to write stories. He has commissioned an artist to paint stories. The writer can pick one or more of the paintings to build a story. It's not an ordinary sequencing activity: the pictures are deliberately a bit vague so that the writer can make up his own mind. There is no perfectly right order. You could make up your own story from one picture so it is a writing prompt, not a test. Have a look. Check out the whole set of webpages. I believe His Honour appears in the pumpkin story.
It could be a tell-me-a-story activity in which the child discusses it with an adult. The adult could write down the dictated story to send in, but it could just be for fun. Oral literature is still literacy.