When your kiddos are preschool/Kinder age they should be able to "read" or actually read the names of the colors. Back in 2004 I was tutoring a second grader who didn't know his colors and was unable to read them. So, I made an entire tutoring lesson on colors! I created a test to use on students to assess their knowledge on reading their colors. This is a great tool to use if you are teaching preschool!
You can download my test for FREE here: Color Sight Words Recognition Test
There are 2 levels to the test:
Use page 1, the list sheet, to put in front of your student/child. I use an index card or paper to cover up the ones below so they are focusing on one word at a time. Just slide down the paper as they go (hope that makes sense). Then, you as the teacher record their responses on page 2. Put a check under "sound" if they get it correct and a check under "IR" if it is incorrect. You can also record the actual word they say in the column too so you know if they are getting their yellow and orange mixed up.
So, this test really tells you if they can recognize their COLORS rather than actually read the word.
Perform this test the same you would do the test above. However, this test more assesses whether the child can truly read the word without the color being associated with the word.