William Morse Cole, his life, career, and publications.
The essence of Cole’s accounting course is to be found in his textbook:
Accounts. Their Construction and Interpretation for Business Men and Students of Affairs. Boston: Houghton Mifflin Company, 1908.
“The first issue of this book was brought out at a time when no general, non -technical, non-professional treatise on accounting had been published . The author had then been giving for eight years a course of instruction to seniors in Harvard College on the principles of accounting, and believed that many business men and students of affairs would be interested to see briefly but comprehensively how accounts are constructed and interpreted.”
Revised and enlarged edition, 1915.
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Local boy makes good
(a sample)
At a recent meeting of the president and fellows of Harvard College William Morse Cole was appointed assistant professor of accounting for five years from Sept. 1. Mr. Cole was formerly one of the teaching staff of the B.M.C. Durfee High school, which he left to teach in Worcester [South High School].
Source: Fall River [Massachusetts] Daily Evening News (May 19, 1908), p. 7.
William Morse Cole, who for a number of years was an instructor in English in the B.M.C. Durfee High school, but at the present time professor in the new school of business of Harvard University, has recently published a book entitled “Business Law and Methods.”
Source: Fall River [Massachusetts] Daily Evening News (August 20, 1909), p. 6.
William Morse Cole, formerly an instructor in the B.M.C. Durfee High school, now assistant professor of accounting in Harvard University, has published through D. Appleton & Co., a volume entitled “The American Hope,” an attempt to look beyond the unfavorable symptoms of American life to show the rational point of view toward American conditions.
Source: Fall River [Massachusetts] Daily Evening News (April 1, 1910), p. 11.
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Earlier accounting exams
1901-02
1902-03
1903-04
1904-05
1905-06
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Course Enrollment
1906-07
Economics 18. Mr. W. M. Cole. — Principles of Accounting.
Total 90: 7 Graduates, 50 Seniors, 21 Juniors, 8 Sophomores, 4 Others.
Source: Harvard University. Report of the President of Harvard College, 1906-1907, p. 71.
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ECONOMICS 18
[Homework?]
The following transactions are to be entered in complete form, with full details and index references; the resulting figures are to be carried through a six-column statement; the books are then to be closed as for the end of the year, and a Balance Sheet for the beginning of the new year is to be shown.
The books to be used are a journal, a special-column cash-book, a sales book, a purchase book, and a ledger. When insufficient details for a complete entry are given below, reasonable details are to be assumed. Interest and discount should be figured at 6%.
In determining and recording profit, all additional facts necessary to know are to be assumed at fairly reasonable figures. Care should be taken that all necessary additional facts are considered.
Do not attempt in this case to analyze the profit into its three elements, wages of management, interest on investment, and pure profit, but consider it an entity and carry it to the account of the proprietor, to the amount of an even $1000.
January
1. You (use any name you wish) begin business with the following capital: cash, 15,000; store building, 15,000; promissory notes to the amount of 5000 (as follows: Felix Holt, 1000, dated to-day, payable in two months; Adam Bede, 2000, dated Dec. 1, two months; Silas Marner, 500, dated Dec. 16, one month; Richard Feverel, 1500, dated Nov. 1, payable on demand with interest). Buy office and store furniture for cash, 500. Pay for postage, 15. Buy stationery, books, etc., for cash, 125.
2. Buy goods of David Copperfield, payment due in 10 days, 4000. Buy goods of Oliver Twist for cash, 3000.
3. Pay freight, 65. Pay telephone bill, three months, in advance, 25.
4. Buy horses and wagon, cash, 500. Pay for advertising, 30.
5. Sell goods to Dombey & Son, 30 days time, 700. Buy goods of Enoch Arden, cash, 6000.
8. Pay wages: bookkeeper, 25; three clerks, at 15 each; driver, 10.
9. Buy goods of Henry Esmond, 10 ds., 7000. Accept David Copperfield’s draft on you, payable in three days, for the amount of your bill.
10. Discount at a bank your own note (signed for the business) for 5000, 30 days. Richard Feverel pays his note.
11. Buy goods of Silas Lapham, cash, 6000.
12. Discount Adam Bede’s note, getting 1993.33. Pay your acceptance of the 9th.
13. Sell goods to Roderick Hudson, 10 ds., 575.
15. Sell goods to David Balfour, 10 ds., 200.
16. S. Marner’s note is paid. Sell goods to John Halifax for his note, 30 ds., 600.
17. Sell goods to John Nicholson, cash, 300.
18. Borrow on your own note for 30 ds., bearing interest, 4000.
19. Pay H. Esmond in full. Pay insurance, 100.
20. Pay freight, 75. Sell goods for cash, 150. Sell goods to Nicholas Nickleby, 30 ds., 1200.
22. Pay wages, two weeks, at the same rates as on the 8th. Pay for remodelling offices, 400. Three months’ rent is paid in advance by a tenant to whom one of the remodelled offices is let, 100.
23. R. Hudson’s bill is paid. Paid for coal, 100.
24. Pay subscription for flood sufferers, 100. Sell goods for cash, 1200.
25. Draw a draft on Dombey & Son, payable in ten days, to your own order, for the amount of their bill due Feb. 4. Pay a dry-goods bill for your wife out of the cash drawer, 75. David Balfour’s bill is paid.
26. You receive, accepted, the draft drawn on the 25th.
27. You discount at a bank Dombey & Son’s acceptance.
29. Sell goods to David Balfour, 30 ds., 1300.
30. Pay wages as before.
31. Pay for lighting, 15. You draw for your own use, 150.
Source: Harvard University Archives. Syllabi, course outlines and reading lists in Economics, 1895-2003. Box 1, Folder “Economics, 1906-07”.
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ECONOMICS 18
Mid-year Examination, 1906-07
Perform and arrange your work strictly in the order of the questions, and so present it that each topic shall be in a paragraph by itself
- (a) Jan. 1, X invests in a partnership a note of his wife, for $5000, due in one month. (b) Jan. 14, X exchanges the note for one of his own payable at the same time. (c) Jan. 25, X takes up his own note, leaving in exchange an accepted draft, due Feb. 1, on B, who is a creditor of the partnership. (d) Feb. 1, the debt of the firm to B becomes due, and B’s acceptance is sent to him in payment.
Journalize the entries, designating each by a letter as above.
(e) In the meantime, B, not knowing that X is a member of the firm and that his acceptance will be used to cancel a debt to him, sends his check to X for payment of the acceptance. The two letters cross, and X, not knowing that the acceptance has been sent to B, turns in the check to the cashier, who misunderstands X and thinks the check is invested by X.
What entry will the cashier make?
(f) X discovers that the cashier has misunderstood him, and explains. The correct situation is discovered, is confirmed by a letter from B, and a check is sent to B, his check being already deposited.
What entry shall now be made to correct the books? - “The profit and loss account on the balance sheet is simply the difference between resources and liabilities.”
“The profit and loss account on the balance sheet is taken directly from the ledger and represents the balance of all undistributed loss and gain.”
Either reconcile these two statements or show why one is correct and the other incorrect. - You are in charge of “taking account of stock” in a store. The clerks give you the numbers and descriptions of articles, and the invoice book-keeper fills in prices as they appear on incoming bills. How far is this material adequate for an inventory?
- You have balance sheets of a corporation for two successive years, but you can get no other information. How much can these sheets tell you of the business for the intervening year?
- A man’s business is of the cash mail-order variety, both for purchases and for sales. He handles no goods, but orders others to ship directly to his customers. For some classes of goods, he issues catalogues, which he sells for a small fee intended to pay for postage and printing; for other goods he advertises in magazines; and for other goods not covered by magazines and catalogues, he advertises by means of painted signs. He conducts a premium department for second and third orders exceeding a definite sum in value. He pays his office help, for their correspondence, on the piece-price plan, with deductions for errors.
What ledger accounts should you recommend him to use? If you would recommend any unusual ones, state the method and the purpose of their use. - Describe the principal books that you would recommend for the business described in the preceding question, and show how they could be employed with minimum labor. Illustrate by rough but intelligible forms, showing by posting-checks how posting is to be done.
Source: Harvard University Archives. Harvard University. Mid-year Examinations, 1852-1943. Box 7, Bound Volume: Examination Papers, Mid-Years 1906-07.
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ECONOMICS 18
Year-end Examination, 1906-07
The points indicated at the beginning of each question show comparative value on a scale of one hundred. Omit questions to the value of fifteen points. Follow the order of the questions. Write on the exact subject set, not on some other subject that chances to be allied. As far as practicable, put your answers in tabular or parallel-column form. Give a new paragraph to each part of each answer.
- (7½ points.) What are the advantages and the disadvantages of keeping a separate sales ledger?
- (7½ points.) Is it possible (whether it is desirable or not) to keep books without a journal? If so, explain under that plan how one could best enter the exchange of bonds for stock, and defend such treatment.
- (15 points.) State briefly what facts are shown by each of the following ledgers: stock; stores; bond; purchase; machine; deposit.
Classify these ledgers on the following bases: those represented by general ledger accounts; those to which posting is done; those from which posting is done; those which are purely statistical. - (40 points.) Assume your inability to go behind the returns. Arrange the following items in intelligible form, and show the mathematical correctness or discrepancy of the conclusions:
| Sales | $249,000 | Material on hand a year ago | $21,600 |
| Accounts receivable | 17,000 | Taxes paid | 800 |
| Material on hand | 14,000 | Taxes accrued to pay | 800 |
| Capital Stock | 90,000 | Plant | 65,000 |
| Wages due | 7,000 | Merchandise | 67,000 |
| Wages paid | 83,000 | Rentals earned and rec’d | 200 |
| Dividends paid | 9,000 | Rentals accrued but not due | 300 |
| Bonds issued | 30,000 | Accounts payable | 46,000 |
| Real estate | 25,000 | Suspense accounts | 1,000 |
| Cash | 12,000 | Repairs of plant | 6,000 |
| Patent rights | 16,000 | Surplus for the year | 4,000 |
| Sundry sums written off | 13,000 | Miscellaneous costs | 11,500 |
| Bills receivable | 7,000 | Material purchased | 85,000 |
| Interest paid | 900 | Selling costs | 20,000 |
| Interest accrued to pay | 600 | Estimated value of outstanding advertising paid for | 2,000 |
| Surplus on ledger | 52,100 | ||
| Insurance paid | 500 | ||
| Insurance unexpired | 200 |
- (15 points.) Discuss the general principle of distinction between charging to revenue and charging to capital. Does this apply to the treatment of premium on bonds? Explain.
- (7½ points.) What sets of records should be kept for bonds held under each of the following circumstances: (a) ownership; (b) in trust; (c) as collateral?
- (7½ points.) On which side of a balance sheet are you likely to find the following accounts; will corresponding or related accounts, under the same or another name, appear for each on the other side of the sheet; if so, what relation, both as to nature and as to amount, will exist between the two: depreciation fund; treasury stock; collateral trust bonds?
- (7½ points.) What is the usual method of recording individual holdings of capital stock?
- (7½ points.) What is the argument for figuring depreciation of machinery at a fixed rate on depreciated valuation rather than on original cost?
Source: Harvard University Archives. Harvard University, Examination Papers, 1873-1915. Box 8, Bound vol. Examination Papers 1906-07 (HUC 7000.25), pp. 41-42.