The principles of accounting course taught by William Morse Cole in the department of economics at Harvard was expanded to two semesters in 1905-06.
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Earlier accounting exams
About William Morse Cole
1901-02
1902-03
1903-04
1904-05
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Course Enrollment
1905-06
Economics 18. Mr. W. M. Cole. — Principles of Accounting.
Total 44: 6 Graduates, 23 Seniors, 7 Juniors, 3 Sophomores, 5 Others.
Source: Harvard University. Report of the President of Harvard College, 1905-1906, p. 73.
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ECONOMICS 18
Mid-year Examination, 1905-06
I
- What is the function of nominal accounts in double-entry book-keeping?
- The books which the following trial balance represents are correct and record only normal transactions. Is the trial balance satisfactory? If not, show how you would go to work to correct it.
| Proprietor | 45,000 | |
| Merchandise | 17,200 | |
| Cash | 9,000 | |
| Interest | 500 | |
| Bills Payable | 4,000 | |
| Real Estate | 15,000 | |
| Bills Receivable | 20,000 | |
| Accounts Receivable | 14,000 | |
| Rentals | 500 | |
| Expenses | 8,200 | |
| ______ | ______ | |
| 66,700 | 66,700 |
- If rent is earned on buildings owned, should the amount of rent be debited or credited? Is it objectionable to enter the amount to the Real Estate account? If so, why?
- Construct a special-column journal to do all the work of journal, sales book, purchase book, and special-columncash book, combined. Illustrate briefly how posting would be done from it.
- Name the four common groups of railroad operating-expense accounts and show the logic of the classification.
II
Show the balance-sheet for a business which meets the following conditions: Capital stock, 200,000; cash on hand, 7,000; surplus, 50,000; manufactured goods on hand, 10,000; notes outstanding, 25,000; sums owed for raw material, 25,000; sums owed for wags, 3,000; raw material on hand, 6,000; undivided profits, 4,000; notes of customers on hand, 17,000; depreciation fund, in bonds, 8,000; sums due from customers, 15,000; real estate, 100,000; machinery, etc., 144,000.
In the following year the business is as follows: Goods manufactured (on contract), 147,000 (contract price); goods delivered (on contract), 135,000; collected on goods, 129,000 in cash, 20,000 in notes; labor expense incurred and paid, 50,000; raw material bought, 75,000; raw material paid for, 90,000; raw material consumed, 70,000; new machinery bought and paid for, 20,000; interest paid, 1,000; interest accrued against the corporation, not yet due, 200; collected on notes, 28,000; general expenses paid, 9,000; borrowed on notes, 50,000; repairs of buildings paid from depreciation fund, 2,000; paid on notes, 20,000; losses from bad debts, 1,000; taxes, 1,000; dividends, 17,300.
Show the income sheet for the year.
Show the balance sheet for the new year.
[It is probable that time will be saved and confusion will be avoided if a rough journal and a rough ledger are used for assistance in working out the above problem. Only results are required, however.]
Source: Harvard University Archives. Harvard University. Mid-year Examinations, 1852-1943. Box 7, Bound Volume: Examination Papers, Mid-Years 1905-06.
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ECONOMICS 18
Year-end Examination, 1905-06
Follow the order of the paper, not only in arrangement but also in performance.
- What is a trial balance? How far is it useful?
- What is the relation between an income sheet and a balance sheet? Can an item appear upon both at the same time?
- What ought books to show with regard to discounts (on merchandise) for prompt payments?
- Arrange the following items of a railroad report in proper form, and fill in any important omissions by figures derived from the items given:—
| [Figures represent millions of dollars] | |||
| Fixed charges | 5.0 | Accrued liabilities | 3.0 |
| Accounts payable | 4.0 | Claims audited | 1.0 |
| Bills receivable | 0.5 | Funded debt | 85.0 |
| Other income | 4.0 | Supplies | 3.0 |
| Investments | 67.0 | Accounts receivable | 4.0 |
| Accrued assets | 1.5 | Earnings from operation | 17.7 |
| Dividends | 1.8 | Cost of road | 50.0 |
| Cash | 4.0 | Net earnings | 5.9 |
| Capital stock | 30.0 | Miscellaneous assets | 1.0 |
| Betterments charged to income | 1.0 | ||
- A partnership is organized on January 1. On July 1 a partner dies. How far is a correct trial balance taken on the latter day a satisfactory basis for a settlement of the dissolved partnership? Assuming the ordinary commercial accounts to be kept, how should you go to work to determine the share of each partner?
- Except for the items mentioned below, a corporation’s balance sheets for 1905 and 1906 show the same figures. How much do these items tell about the history of the corporation for the year 1905-1906?
| 1905 | |||
| Surplus | $70,000 | ||
|
1906 |
|||
| Depreciation Fund | $20,000 | Reserve Fund | $60,000 |
| Depreciation Fund | $20,000 | ||
| Surplus | $10,000 | ||
- How should you determine on an interest date the value of ten-year bonds bought (at the time of issue) at a premium and now having five years more to run? [Do not figure, but describe have process.] Should the books show that value? If so, how and where? If a portion of the bonds is now sold at less than the value so determined, how should the sale show on the books?
- A factory is engaged in a dying industry. Five years is the estimated life of the machinery and of the good-will. The buildings are convertible to other uses. The corporation will be dissolved at the end of five years.
Describe a brief administrative policy that you would recommend to close the business and end the corporation, and then describe the accounting processes to record the closing transactions and to leave no balances on the books.
Source: Harvard University Archives. Harvard University, Examination Papers 1873-1915. Box 8, Bound volume: Examination Papers, 1906-07; Papers Set for Final Examinations in History, Government, Economics,…,Music in Harvard College (June, 1906), pp. 42-43.
Image Source: Harvard Alumni Bulletin, Vol. XIX, No. 16 (January 18, 1917), p. 308. Portrait of William Morse Cole colorized by Economics in the Rear-view Mirror.