Harvard. Exams for principles of accounting. W. M. Cole, 1907-1908

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.

__________________________

Earlier Accounting Exams

1901-02
1902-03
1903-04
1904-05
1905-06
1906-07

________________________

Course Announcement
1907-08

*[Economics] 18. Principles of Accounting. Mon., Wed., and (at the pleasure of the instructor) Fri., at 3.30. Mr. W. M. Cole

Course 18 is not open to students before their last year of undergraduate work. It may be taken as a half-course in the first half-year.
[“A star (*) prefixed to the number of a course indicates that the course cannot be taken without the previous consent of the instructor.” Introductory note.]

Source: Harvard University. Announcement of the Courses of Instruction offered by the Faculty of Arts and Sciences 1907-08, 2^nd ed., p. 50.

________________________

Course Enrollment
1907-08

Economics 18. Mr. W. M. Cole. — Principles of Accounting.

Total 83: 10 Graduates, 41 Seniors, 22 Juniors, 6 Sophomores, 4 Others.

Source: Harvard University. Report of the President of Harvard College, 1907-1908, p. 67.

________________________

ECONOMICS 18
Mid-year Examination, 1907-08

1. Give suppositional details to illustrate the meaning of the following journal entries:

Adam Bede
	To Stationery
Accounts Payable
	To Bills Payable
Bills Receivable
	To Machinery
Surplus
	To Capital Stock
Loss and Gain
	To Bills Receivable

2. “Real Estate is a capital account, and Rent is a revenue account.” How far is this statement true? If it is correct, what does it mean? If it is incorrect or inadequate, compare these two accounts in respect to both the use and the ultimate treatment of them.
3. Illustrate roughly any book of original entry constructed in such form that the maximum number of entries may be made so as to require only the minimum number of postings. Show ten entries with an indication of three postings to cover them.
4. Fill out the following incomplete six-column statement, using no figures not given or implied.

	Dr.	Cr.	Resources.	Liabilities.	Loss.	Gain.
Cash			20,000
Office furniture	3,000				500
Expense	13,000				13,000
Interest	500					50
Bills Receivable			5,000
Bills Payable				2,000
Accounts Receivable	3,000
Accounts Payable		1,000
Merchandise	20,000					21,000
Capital Stock

Show the balance sheet for the new year, supposing no dividends to be declared.

5. Arrange the following items in what seems to you the best form of income sheet: commission paid, 12,000; depreciation, 1,500; dividends, 20,000: rent paid, 1000; surplus for the year, 12,500; wages paid, 110,000; miscellaneous expenses, 8,000; material consumed, 85,000; sales of merchandise manufacture, 250,000. It is assumed that no goods are bought.
6. Show the Loss and Gain account on the ledger for the corporation whose income-sheet figures are given above (problem 5).
7. A summary of the transactions of a corporation for one year is as follows: net income, now in the form of cash, 34,000; dividends declared but not yet paid, 25,000; bills payable converted into capital stock, 20,000; real estate bought for cash, 15,000; notes received in payment of outstanding ledger accounts, 7,000; all other transactions have exactly offset each other, so that except for those mentioned above the status is exactly as it was a year ago. The balance sheet at the beginning of the old year was as follows:

Real estate	70,000	Capital stock	197,000
Machinery	86,000	Bills payable	25,000
Bills receivable	24,000	Accounts payable	12,000
Accounts receivable	20,000	Surplus	21,000
Merchandise	31,000
Cash	24,000

Show the balance sheet for the beginning of the year.

Source: Harvard University Archives. Harvard University. Mid-year Examinations, 1852-1943. Box 8, Bound Volume: Examination Papers, Mid-Years 1907-08.

________________________

ECONOMICS 18
Year-end Examination, 1907-08

I.
Take all.

1. Distinguish between
   1. Trial Balance and Balance Sheet,
   2. Balance Sheet and Income Sheet,
   3. Income Sheet and Profit & Loss account.
2. You are receiver for an insolvent. You find accounts reported on the books as below. The bookkeeping is known to register correctly the amount of receipts and expenditures, and to do this in the accounts apparently concerned. Which of the accounts indicated below would need investigation beneath the surface, and in the case of each what investigation should be conducted to determine the facts?
   Loans on commercial paper; bonds owned; real estate; accounts payable; debts due from branches; capital stock; merchandise in branch stores; collateral held to secure loans made.
3. Compare the purpose and nature of reserve or reserve funds in the following kinds of enterprise: fire insurance; manufacturing; banking; life insurance.
   Name and describe any other kinds of reserve that occur to you.
4. The following items appear, among others, in one report of a corporation. Interpret each, and show the relation of each to the others if such relation exists.

Assets		Liabilities
Sinking Funds bonds	250,000	Collateral Trust bonds	1,500,000
Discount on bonds	75,000	Sinking Fund	225,000
Bonds of subsidiary companies deposited as collateral	2,000,000	Replacement Fund	100,000
		Surplus	500,000

 

Net earnings		200,000
Other income		100,000
		300,000
Fixed charges	80,000
Discount on bonds	10,000	90,000	210,000
Dividends			150,000
Surplus			60,000

5. Which of the following facts would you recommend to show, and where and how would you show them, in the report of a corporation?

Receipts from operations,
Expense of operations (not including improvements),
Fuel consumed,
Improvements charged to maintenance,
Improvements charged to capital,
Reserve from profits, set aside for future improvements,
Selling costs,
Guaranteed bonds of subsidiary companies,
Interest on capital stock,
Advances to cover deficits of failing subsidiary companies.

II.
Take three.

6. Explain in municipal accounting (a) the common lack of correspondence between different sets of official figures for apparently the same expenditures, and (b) the danger in comparing costs between different cities.
7. Compare the adequacy of a bank balance sheet, as a means of judging solvency, with that of a balance sheet of a mercantile concern.
   Why does a bank balance sheet distinguish between different kinds of cash?
8. What is the ultimate purpose of cost accounting?
   With that purpose in view, defend or oppose the keeping of an account for idle machine time. If you defend it, show how the account should be kept.
9. Does a 5% bond bought at 125 pay 4%? Prove the truth of your answer by indicating the correct entries to interest account when interest is received. (Do not take time to compute definite figures, but illustrate by rough figures or symbols, indicating what they stand for.)
10. When cost figures in manufacturing are based in part on estimates for the distribution of burden, what method is available for revising and correcting such estimates? Illustrate by applying the method to a specific account or group of accounts.

Source: Harvard University Archives. Harvard University, Examination Papers, 1873-1915. Box 8, Bound vol. Examination Papers 1908-09 (HUC 7000.25), pp. 42-44.

Image Source: William Morse Cole faculty portrait in Radcliffe College, Book of the Class of 1913-14. Colorised at Economics in the Rear-view Mirror.