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Harvard. Principles of Accounting. Course description, enrollment, and final exam. W.M. Cole, 1902-1903

As the course description clearly indicates, this undergraduate accounting course was offered by the economics department for those Harvard students planning a business career. At the time accounting was seen to be a kissing cousin to statistics and both essentially amounted to a hill of bean-counting.

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Description of Economics 18
First term, 1902-03

  1. 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 a 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], 1902-03. Published in The University Publications, New Series, no. 55. June 14, 1902.

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Enrollment in Economics 18
First term, 1902-03

Economics 18. 1hf. Mr. W. M. Cole. — The Principles of Accounting.

Total 46: 1 Gr., 28 Se., 11 Ju., 3 So., 3 Others.

Source: Harvard University. Annual Report of the President of Harvard College, 1902-03, p. 68.

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Final Exam in Economics 18
First term, 1902-03

ECONOMICS 18
  1. Under normal conditions, on which side of a ledger — debit or credit — will appear the balance of the following accounts? In each case, state why you think as you do.

Bills Receivable.
Bills Payable.
Capital Stock.
Expense.
Accounts Payable.

  1. What should be debited and what credited after each of the following transactions?
    1. Buying on credit, at the first of the year, stationery expected to last eight months.
    2. Paying for that stationery by issuing a note.
    3. Paying that note.
    4. Exchanging that stationery at cost (none being used) for merchandise.
    5. Selling that merchandise at cost and receiving a note in payment.
    6. Collecting cash for the note.
      Now what is the net result, upon ledger balances, of all these transactions?
  2. Of the following transactions what would be the ultimate effect upon a railroad balance sheet? Designate, in each case, on which side of the balance sheet, and in what items, the change would appear.
    1. The issue of new capital stock and the use of the proceeds for new (additional) equipment.
    2. A conversion of bonds into stock.
    3. A distribution of accumulated profits of the past in the form of a scrip dividend which is converted into stock.
    4. A reduction in the valuation (set by the company in its own books) of stocks and bonds owned.
    5. Watering stock to represent supposed increase in earning capacity.
  3. In the middle of a business year, July 1, the sole proprietor of a store dies suddenly. You, as his executor, must determine the exact worth of his business. The trial balance of July 1 is given you. Can you get all needed information from that trial balance? If not, what is lacking? State just what you would do to determine the worth of the business. If you can explain best by figures, assume arbitrary figures (not necessarily reasonable) and proceed with those as a basis. Processes, rather than results, are to be shown.
  4. In cases of depreciation, one of at least three courses is open to the managers. State what are the three, and show how each is treated in the accounts.
  5. The following is a page of a book:–
Jan. 1 Balance 1,547.30
A. Andrews His invoice, Dec. 1 615.10
Bills receivable No. 127 paid 500.00
Bills payable No. 19 discounted 1,000.00
Merchandise Cash sales 173.28
Jan. 2 Bills receivable No. 116 paid 123.50
Insurance Premium ret’d on policy 73.23
Jan. 3 Bills receivable No. 139 paid 312.26
Bills receivable 935.76 935.76
Cash, Dr. 2,797.37 2,797.37
4,344.67

Explain fully what transactions are here recorded. What postings should be made, and to which side of each account? If any figures are not to be posted, why not?

  1. Can all the accounts of a business be nominal? Why, or why not?
    Can all the accounts of a business be real? Why, or why not?

Source: Harvard University Archives. Mid-year Examinations 1852-1943. Box 6. Papers (in the bound volume Examination Papers Mid-years 1902-1903).
Also included in Harvard University Archives. Examination Papers 1873-1915. Box 6. Papers Set for Final Examinations in History, Government, Economics, History of Religions, Philosophy, Education, Fine Arts, Architecture, Landscape Architecture, Music in Harvard College, June 1903 (in the bound volume Examination Papers 1902-1903).

Image Source: Harvard Alumni Bulletin, Vol. XIX, No. 16, p. 308. Portrait of William Morse Cole colorized by Economics in the Rear-view Mirror.