“Principles of Accounting” was one of three courses offered by the department of economics that were specifically targeted to advanced students who intended to start business careers after graduation. William Morse Cole, A.M. was the instructor. An earlier post provides an overview of his career.
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From previous years…
1900-01
1901-02
1902-03
1903-04
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Course Enrollment
1904-05
Economics 18 1hf. Mr. W. M. Cole. — Principles of Accounting.
Total 27: 7 Graduates, 14 Seniors, 2 Juniors, 1 Sophomore, 3 Others.
Source: Harvard University. Report of the President of Harvard College, 1904-1905, p. 75.
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Course Description
1904-05
[Economics] 18 1hf. The Principles of Accounting. Half-course (first half-year). Mon., Wed., and (at the pleasure of the instructor) Fri., at 3.30. Mr. W. M. Cole.
This course is designed primarily for students who expect to enter a business career, and wish to understand the processes by which the earnings and values of industrial properties are computed. It is not intended to afford practice in book-keeping, but to give students a grasp of principles which shall enable them to comprehend the significance of accounts.
In order that students may become familiar with book-keeping terms and methods, a few exercises will be devoted to a brief study of the common systems of recording simple mercantile transactions. The chief work of the course, however, will be a study of the methods of determining profit, loss, and valuation. This will include an analysis of receipts, disbursements, assets, and liabilities, in various kinds of industry, and consideration of cost of manufacture, cost of service, depreciation and appreciation of stock and of equipment, interest, sinking funds, dividends, and the like. Published accounts of corporations will be studied, and practice in interpretation will be afforded. Attention will also be given to the functions and methods of auditors.
The instruction will be given by lectures, discussions, reading, and written work.
Course 18 is open to Seniors and Graduates who have taken Economics 1.
Source: Harvard University. Faculty of Arts and Sciences. Division of History and Political Science Comprising the Departments of History and Government and Economics, 1904-05 (May 16, 1904), pp. 47-48.
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ECONOMICS 18
Mid-year Examination, 1904-05
- Construct an imaginary trial balance of at least eight items, of which not over three shall represent persons or corporations.
- In a proprietor’s absence the books of a business are opened and kept by a bookkeeper who keeps accurate record of transactions reported to him but cannot be trusted to figure valuations or profits. At the end of a year, the records show, before the books are closed and simply as the result of regular transactions, the following figures:
Proprietor’s investment, $100,000; Bills Payable, $17,000; Bills Receivable, $26,000; Real Estate, $20,000; Accounts Payable, $15,000; Accounts Receivable, $20,000; Cash, $5,000; Merchandise on hand, valued at cost, $75,000; Merchandise Dr. on ledger, $49,500; Expense, $12,000; Interest balance received, $500.
Now the proprietor returns and wishes to close his books for the year. If he needs any information not given above, what questions will he ask in obtaining it? Assume any fairly reasonable answers to such questions, if any, and then show what is the proprietor’s present investment in the business. - The annual report of a corporation shows the following figures: Profit and Loss credit balance at the beginning of the year, $20,000; Merchandise profit, $140,000; Expense, $100,000; appreciation of Real Estate, $10,000; permanent Surplus set aside at the end of the year, $15,000; Dividends, $50,000. Present in rough ledger form i.,e. debit and credit items, the Profit and Loss account for the year, showing the balance at the end of the year.
- Explain the significance of each of the following accounts appearing, with a balance on the side indicated, on (1) a balance sheet for the beginning of a new fiscal year, and (2) a trial balance taken in the ordinary course of business during the year: Wages, Cr.; Interest, Dr.; Merchandise, Dr.; Profit and Loss, Dr.; Reserve Fund, Cr.; Supplies, Dr.
- An annual report of a corporation shows, either on the income sheet or on the balance sheet, an item of which the title means little or nothing to you, e.g., “Pro rata share of bonds of H.R.L. Co.” Assuming the accounts to be kept properly, explain to what extent the position and the treatment of the item throw light upon its character.
- A corporation shows the following statements:—
| 1903. | 1904. | ||
| Plant | $450,000 | $440,000 | |
| Supplies | 59,000 | 27,000 | |
| Real Estate | 100,000 | 95,000 | |
| Cash | 15,000 | 15,000 | |
| Bills Receivable | 50,000 | 60,000 | |
| Accounts Receivable | 20,000 | 15,000 | |
| Merchandise | 83,000 | 108,000 | |
| Capital Stock | 500,000 | 500,000 | |
| Bills Payable | 150,000 | 150,000 | |
| Accounts Payable | 100,000 | 90,000 | |
| Wages | 7,000 | 10,000 | |
| Profit and Loss | 20,000 | 10,000 | |
| Proceeds from sales | 600,000 | ||
| Direct cost of production | 500,000 | ||
| General expenses, fixed charges, etc. | 70,000 | ||
Tell all you can about the history of the corporation for the year 1903-04.
- If bonds on hand were bought at a premium, should that fact show upon the income sheet or in any way affect it?
- The books of three concerns are open to your inspection. Outline briefly a scheme for consolidating the three concerns into a corporation.
[Do not allow yourself to get involved in the fascinating details of such a scheme at the expense of time needed for other things. This may well be left for surplus time and energy. Bookkeeping entries are not required. Show how the accounts of the three concerns can be interpreted for such a purpose.]
Source: Harvard University Archives. Harvard University, Examination Papers 1873-1915. Box 7, Bound volume: Examination Papers, 1904-05; Papers Set for Final Examinations in History, Government, Economics,…,Music in Harvard College (June, 1905), pp. 37-38.
Image Source: Harvard Alumni Bulletin, Vol. XIX, No. 16, p. 308. Portrait of William Morse Cole colorized by Economics in the Rear-view Mirror.