An examination of early US twentieth century first-year accounting textbooks

Introduction

Were early first-year accounting college textbooks all alike in the United States? Which audiences or college majors were they trying to serve? Were all of them preparer oriented or did some of them consider a user perspective, at least in part? Did they approach the accounting cycle and valuation issues in the same way? What was their problem material like? Are there any particularly unique aspects of the books?

These and other questions are answered by examining the first editions of first-year accounting textbooks published in the United States during the first third of the twentieth century. This was the time when the number of US colleges and universities offering accounting courses was expanding rapidly, from 13 in 1900 to 335 in 1926 (Alien, 1927). During the nineteenth century, accounting was primarily taught in business colleges whose proprietors often authored the textbooks (Previts & Merino, 1998, pp.75-6 and 150-4).1 Accounting education began to shift to colleges and universities in the early twentieth century and textbooks were developed to serve this new audience.

Textbook authors had to decide how to best serve college and university students. The best approach was not obvious since those aspiring to professional accounting careers in the early twentieth century came from different educational backgrounds. For example, Carey (1969, p.270) reports that of new members in the American Institute of Accountants during 1917-1926, there were more without a high-school diploma than there were with a college degree. And for those who did attend college, there was a wide array of programs (Zeff, 1966, p.5) and serious debate about the nature of that education (Zeff, 1966, pp.8-9). For instance, Blight (1925) believed in a broad education while Belser (1927) thought that there should be a mix of procedure and theory. Similarly, although practitioners at the turn of the twentieth century initially desired a conceptual education from universities, later they were concerned with the lack of practicality in that education (Jackson, 1922; Pinkerton, 1924).

This study examines the first-year accounting textbooks developed to serve this new and diverse audience of students. In the first section, however, as background for the development of the books, the growth of accounting and accounting education in the United States are discussed. The first-year accounting books are identified in the next two sections. A topical overview of these books is then provided. This is followed by a greater in-depth analysis of the more successful textbooks - those with three or more editions. The analysis focuses on the previously stated research questions. The overview and detailed analysis give a sense of the types of books that were available in the early twentieth century and their pedagogical approaches to first-year accounting courses in the United States. The final section of this paper provides a summary, conclusions, and suggestions for further research.

The growth of accounting and accounting education to 1935

The growth in university accounting education in the United States during the early twentieth century was phenomenal. It largely followed the growth in the accounting profession, both public and private, which, in turn, was spurred on by the rapid industrial development of the United States starting with its Civil War (Garraty, 1995, pp.492-516).

Although there is some evidence of public accountants in the US in the late 170Os and early 180Os (Langenderfer, 1987, p.304), there were relatively few. When Edwin Guthrie, a Chartered Accountant from England, visited New York in the early 1880s, he was surprised to find that, unlike in England that had Chartered Accountants, there were not many public accountants available to aid him in his receiver duties for an English bankrupt concern with property in America.2 He began a firm with John Barrow and Charles Wade in 1883 and, later, in 1886, he and about a half dozen men interested in public accounting formed the American Association of Public Accountants (predecessor of the American Institute of Certified Public Accountants), which was incorporated in the state of New York the following year (Anyon, 1925a and 1925b). Public accounting, whose chief services involved investigating defaults/embezzlements and providing bookkeeping help, grew slowly. It was not until the early to mid 1890s that the demand for audit services started to grow significantly (Anyon, 1925c; McKinsey, 1925) and it was not until 1896 that the first Certified Public Accounting (CPA) legislation was passed (also in New York). Other states soon followed (Chase, 1906).

Public accounting began to foster the need for more college accounting courses. Unhappy with the CPA legislation in some states, the newly renamed American Institute of Accountants (AIA) offered its own exam starting in 1917 and developed criteria for AIA membership that exceeded many of the states' criteria for CPA designation. By the mid 1920s, nearly seventy percent of the states had adopted the AIA's exam for their own use (Richardson, 1926c). In addition, following World War I, there was a shortage of CPAs despite their relatively high compensation (Richardson, 1919). Consequently, the AIA started a placement service for college graduates wanting to enter the public accounting profession (Richardson, 1926a and 1926b). The AIA concluded in the 1920s that the men that they wanted to join the profession were attending college though many of their members at the time not only did not have college degrees, but had not even finished high school (Nissley, 1928). Moreover, prospective members of the profession were encouraged to go to college for preparation for the CPA exam (Fedde, 1926, p.86-7). This trend toward a college education occurred even though a college degree was not a prerequisite to become a CPA in any state until 1938 (Edwards & Miranti, 1987, p.32).3

Additional important factors in the development of the accounting profession were the passage of the Payne-Aldrich Tariff Act in 1909 that subject corporations to income tax and the passage of the Sixteenth Amendment to the Constitution in 1913 that extended the income tax to individuals (Roth, 1987). Although limited in scope initially, a growing segment of people and corporations needed help with tax returns as well as with keeping the supporting records. These needs were exacerbated by World War I, which resulted in a dramatic increase in taxation of individuals and an excess profits tax on corporations (Richardson, 1918a and 1918c). At this time, the Internal Revenue Bureau also was in dire need of tax accountants (Beers, 1928).

Not surprisingly, cost accounting also grew with industrialisation. Cost accounting became important although there was some question as to how well it was being done. This was one of concerns of the Federal Trade Commission (FTC), formed in 1914 (Richardson, 1917), as well as the National Association of Cost Accountants, formed in 1919 (Vangermeersch & Jordan, 1996). The factors spurring the growth of cost accounting included World War I with the related increase in production and the administration of war contracts (Richardson, 1918b) as well as the general prosperity of the 1920s. Winter (1928) also noted a similar need to improve the accounting for distribution costs and not just fabrication costs. There was also a need to train not just accountants, but business managers (McKinsey, 1920; Richardson, 1924). Moreover, the position of controller became established in large organisations and the need to educate people for such a position became evident (Lay, 1928). As a related consequent, public accountants' role as business advisors developed as controllers looked to them for help with their duties (McKinsey, 1925) and as management and investment bankers came to rely upon their judgment (Andersen, 1922 and 1926).4 Thus, the need for accounting education transcended those wishing to become accountants.

With the increasing urbanisation of the United States, municipal accounting also became important as cities and states grew. There was concern in the Progressive Era with holding elected officials accountable.5 The National Municipal League was formed in 1894 and its committee on uniform accounting methods (CUAM) developed at the turn of the twentieth century a series of schedules and forms for municipalities. By 1904, 80 cities and, by 1912, a dozen states had modernised their accounting systems along the lines suggested by GUAM (Fleischman, 1987).

The significance of the accountant in the economy is reflected in the publication of Uniform Accounting (later entitled Approved Methods for the Preparation of Balance-sheet Statements) in 1917 (US Federal Reserve Board (FRB)). This document was written upon request of the FTC to the AIA and approved by both the FTC and the FRB. It was revised in 1929 as the Verification of Financial Statements (US Federal Reserve Board). The primary purpose of these documents was to better standardise auditing procedures so that both auditors and users of financial statements would know what was involved.6

General, business, and accounting education were each affected by the industrialisation of the United States. Prior to 1900, private commercial schools were the prevalent means of obtaining a business education (Prickelt, 1928). Other organisations then began taking a greater role including correspondence schools, Young Men Christian Associations, corporation schools, high schools, junior colleges, and universities. High schools, which first made their appearance in 1821, began to spread rapidly during the last third of the nineteenth century. Their enrolments grew rapidly in the early twentieth century. For example, during 19181924 public high school enrolment grew by 57 per cent with the number of commercial business students in high school growing 97 per cent. General university enrolments as well as enrolments in business programs were also rapidly growing in the 1920s. By 1924, 80,000 students were enrolled in business programs at universities in the United States, increasing from 12,000 in about ten years (Prickelt, 1928).

With respect to accounting, universities offering accounting courses grew from about a dozen in 1900, to slightly over a hundred in 1916, and by 1926, over 335 colleges and universities offered accounting courses (Allen, 1927). Universities where one could major in accounting grew from just two at the bachelor's level in 1910, to about 20 in 1916, and to at least 60 in 1926 (Treleven, 1917; Allen, 1927). This growth in programs reflected Jackson's (1925) claim that accountants of all types needed a well-rounded business education from a college or university. In addition, different types of accounting courses were being offered. For example, cost accounting courses were offered in about 34 universities by 1916 and by 147 in 1926 (Treleven, 1917; Alien, 1927) while governmental and municipal accounting courses were offered for the first time in 1913 (Alien, 1927). By 1930, common courses offered by collegiate schools of business included elementary, advanced (a few used intermediate accounting which covered similar topics as in advanced), auditing, costing, CPA problems or advanced accounting problems, accounting systems, and income taxes; other accounting courses included theory, seminar or research, governmental/municipal, managerial, analysis of financial statements, and miscellaneous courses such as building and loan, farm, public, and public utility accounting (Briggs, 1930).

Yet, as accounting courses proliferated there was concern about the diversity in course content from university to university. In fact, one of the initial objectives of the American Association of University Instructors in Accounting (AAUIA), organised in 1916, was the standardisation of accounting courses to aid both businesses in evaluation of prospective hires and universities in evaluating the transcripts of transfer students. Hence, there was a demand for adequate textbooks not only to service the growing number of students, but also to help standardise courses across universities (Elwell, 1917).

Adding to this diversity in accounting courses was the diversity of programs in which they were offered. Loeb (1927), for example, noted that business programs developed both to study the impact of business on society and for the private motive of running businesses better to enhance profits. Stevenson (1928) noted that some schools omitted any specialised technical training while other schools focused upon it. Moreover, Winter noted (1928, p.318) "... schools offering training in accounting are heterogeneous in standards, type and purpose". Even small liberal arts colleges differed in the course work that they offered in accounting, ranging from one course, such as at Yale, to as much as three years, such as at Canisius (Hanslein, 1930). There were also calls to develop accounting courses for engineering students (Stevenson, 1930; White, 1930) and law students (Dohr, 1930; Kendrik, 1931).

Many of the students taking accounting courses, even within a collegiate school of business, did not intend to major in accounting. For example, at the University of Illinois, more than 85 per cent of the students in beginning accounting courses were not accounting majors (Tupy, 1927). He added that such students (Tupy, 1927, p.49) "... wish, at least, to learn how to read and interpret financial statements ...". Others made similar arguments to try to serve the diverse group of students taking diverse accounting courses in diverse programs. For instance, Stevenson (1928, p. 198) claimed that "our first course should not be planned for those who intend to become professional accountants". He also noted that the first course typically had too much emphasis on technique which he thought unnecessary to understand the basics of accounting.7

The sample selection

With this background, this study examines first-year accounting textbooks in the United States during the early twentieth century. Bentley and Leonard (1934b) identified works on accounting published in the United States between I January, 1901 and I January, 1935. They defined works on accounting as (Bentley & Leonard, 1934b, p.iv) "... books and pamphlets of more than twenty-five pages devoted chiefly or wholly to accounting and offered for general rather than restricted distribution". They further restricted their bibliography to works by American authors which they defined as those (Bentley & Leonard, 1934b, p.iv) "... who resided in the United States at the time their works were first published". The authors did not need to be American citizens. However, copies of works of foreign authors, editions of foreign authors printed in the United States, and adaptations of foreign works by American authors were not included in the bibliography (Bentley & Leonard, 1934a, pp.v-vi).

Bentley and Leonard were quite thorough in the compilation of their bibliography. The compilation took almost four years including Leonard spending about sixteen months at the Library of Congress and the Copyright office in Washington, D.C. In addition, she spent several months at the American Institute of Accountants' offices in New York City as well as at other libraries of various types (for example, public, private, business and technical) in major cities and at universities including those of Harvard, Yale, Columbia, Illinois, and Northwestern (Bentley & Leonard, 1934a, p.iii).

Part One of the second volume of their work, 1901-1934, provides a chronological listing of the first editions of works on accounting by American authors. Part Two classifies the books in Part One into one of seven categories. Of interest here is the second category, "General Accounting, College Grade", which includes (Bentley & Leonard, 1934b, p.iii) "(w)orks on elementary and advanced accounting intended primarily for students of college grade or for general reference purposes ...".

First-year accounting textbooks were identified from the second category of Part Two of Bentley and Leonard's bibliography in the following manner. First edition books of at least 100 pages were requested through interlibrary loan (unless our university library had the book). A small number of collections of pamphlets were excluded since they represent a different media. Books of less than 100 pages were also excluded since their titles are not typically indicative of textbooks. The prefaces of the acquired books were examined.8 Books are included in this study if the author/editor clearly stated that the book is meant for first-year students of accounting. This selection criterion might not result in all first-year books being examined, but it does prevent including non-first-year books and, consequently, obtaining an inaccurate depiction of first-year books.

Table 1 summarises the sample selection. Of the 163 first editions listed by Bentley and Leonard (1934b) during 1901-1934, four were pamphlets, 23 were under 100 pages, and seven books could not be obtained through interlibrary loan. This left 129 books that were examined. Of these, 33 were identified as first-year accounting textbooks.

The books

Table 2 lists the full names of the authors, the title of each book, year published, and the publishers. Forty-six individuals contributed as authors for the books with three authors (Bennett, McCarty, and McKinsey) being involved in two books each. Roy B. Rester' s Accounting Theory and Practice, published in 1917, was the earliest book identified as a first-year accounting textbook.

Remarkably, each of the books has a unique title except in eight cases where four sets of two books each share a title: Principles of Accounting (Hodge & McKinsey; Kohler & Morrison); Accounting Theory and Practice (Kester; Rittenhouse & Clapp); Introduction to Accounting (Bolon & Eckelberry; Prickelt & Mikesell); and Fundamentals of Accounting (Sherwood; Wade). Hence, a variety of titles were used for first-year accounting textbooks including some that are not necessarily indicative of an introductory book (for example, Theory of Accounts).

An overview

To obtain an overview of the nature of the books, the first-year accounting textbooks were examined (reviewed/scanned), classifying their topics and/or chapters using the chapters of the recent Needles, Powers, Mills, and Anderson text (1999) as general topics.9 While there is nothing particularly unique about the Needles et al. ( 1999) text other than it is a reasonably popular first-year accounting textbook with which readers may be familiar, it provides a convenient frame of reference for classifying the topics in the sample books. Developing some other classification scheme including one based on the sample books themselves is likely to be fraught with error since it would not be possible to anticipate popular topics. Moreover, the purpose in this section is just to provide an overview. Using as topics the chapters of a popular contemporary book such as Needles et al. (1999) fulfills this purpose in a reasonably efficient manner.

Table 3 shows what general topics are addressed in the sample of the thirtythree first-year texts. An "x" in a column indicates that a text addresses the general concept of a topic (obviously, due to the passage of time, some of the details differ). The number of sample texts addressing the particular topic is given in the next to last row (numbers are shown vertically). This is followed with a corresponding percentage calculation in the last row.10

All of the texts present an introductory chapter, cover the accounting cycle (Chapters 2-4), and include "Merchandising Operations", "Short-Term Liquid Assets", "Inventories", "Long-Term Assets", and "Current Liabilities" (Chapters 5, and 9-12)." Most of the texts (at least 79 per cent) include "Accounting Information Systems", "Partnerships", "Contributed Capital", "The Corporate Income Statement and the Statement of Stockholders' Equity", and "Long-term Liabilities" (Chapters 7, and 13-16). Very few texts (less than 10 per cent) discuss "The Statement of Cash Flows" (or its predecessors), other cost/managerial topics, or "The Time Value of Money" (Chapters 17, 23-27, and Appendix A).

On the other hand, a variety of topics are given particular emphasis or coverage in the texts with entire chapters or sections dedicated to their explanation that are not mentioned or given only the most basic coverage by Needles et al. (1999). Table 4 presents these other topics covered by the first-year accounting textbooks. However, none of these topics are included in a majority of the sample textbooks.

A topic that is often included in the sample texts is "single entry". Single entry bookkeeping is a system in which balance sheet accounts are developed periodically or routinely maintained from available data. The balance sheet is prepared from data collected from inspection or count, and profit and loss is derived from a comparison of capital balances between balance sheet dates. Another topic often covered in the sample texts is the "private ledger", a confidential ledger linked with a control account to the general ledger. It was common for business owners to hide many of their income producing records via the private ledger. Finally, "consignments" are usually reserved for intermediate texts today.

Successful first-year accounting textbooks

To obtain a more thorough understanding of the early first-year textbooks, a detailed analysis was performed on the more successful textbooks. Here, "successful" means a textbook with three or more editions. While there are other measures of success (for example, copies sold), the number of editions is readily obtainable through WorldCat (2000) and should correlate with other indicators of success.

Of the 33 first-year books, seven had three or more editions.12 The authors of these books are: Kester (4 editions; last edition in 1939), Rorem (3 editions; 1942), Howard (5 editions; 1951), McKinsey (20 editions; 2002), Lamberton (3 editions; 1942), Finney (8 editions; 1980), and Wade (3 editions; 1951).13 In the remainder of this study, these books are considered in detail.

Which aspects of the successful texts are considered?

The successful texts are examined for specific aspects. This allows an easier to follow analysis that highlights some of their similarities and differences in a relatively concise manner. The aspects considered relate to the aforementioned research questions and include: the intended audiences; preparer or user orientation; the method of presenting the accounting cycle; valuation alternatives; problem material; and any unique aspects.

The issues of intended audiences and preparer or user orientation involve the basic objective of a book which obviously impacts how it is written. The issues involving the accounting cycle and valuation alternatives involve basic pedagogical approaches. With respect to the latter issue, valuation alternatives in this study focus on inventory and depreciation, two common areas with several methods, potentially allowing for ample differentiation among the texts. Consideration of the problem material, always an important part of an accounting course, also potentially allows for differentiation among the texts. Finally, other unique aspects of the books are considered.

Who were the authors and their intended audiences?

Roy B. Kester, Ph.D., CPA, an instructor in the School of Business at Columbia University, published in 1917 his first edition of Accounting Theory and Practice. He notes in his introduction that there is a shortage of books for a first-year accounting course and his text is an attempt to meet that need. The book is meant for business and professional students without any background in accounting and comprises 552 pages and 57 chapters, most of which are relatively short.

C. Rufus Rorem, CPA, published Accounting Method in 1928 while he was an assistant professor at The University of Chicago. He considered accounting as a method of measuring and interpreting business transactions and as a tool for administrative control. The book is meant for an entire year's study for college students at the sophomore or higher level and is comparable in length to Kester's, being 587 pages long, but including only 40 chapters.

Stanley E. Howard, Ph.D., was an associate professor of economics at Princeton University when The ARC of Accounting was published in 1929. His book, comprising just 17 chapters and 297 pages, is intended as a one-semester course for economics and other students in a liberal arts curriculum.14

At the time of publication of Accounting Principles in 1929, James O. McKinsey, CPA, was a professor of accounting at the University of Chicago and senior partner of James O. McKinsey and Co. The book is intended for college students who would go on to further study in accounting as well as other business majors who would study it for only one year. It is 634 pages in length with 40 chapters.

Robert A. Lamberton, M.A., was an assistant professor at Rutgers when Fundamental Principles of Accounting was published in 1930. In two parts, it is apparently intended for a single introductory course (243 pages and 22 chapters), with perhaps the course credit depending on whether both parts of the book were used. The book is intended for college students, apparently those in business as well as those studying arts and sciences, which Lamberton specifically mentions in his preface.

Henry A. Finney, Ph.B., CPA, was professor of accounting at Northwestern University, in public practice, and for a number of years served as the editor of students' department (which presented solutions of CPA problems) of The Journal of Accountancy. Finney's Introduction to Principles of Accounting, published in 1932 and containing 630 pages in 30 chapters, is intended for a year's study by business students.

Harry H. Wade, B.Sc. in Engineering, M.A., CPA, was an assistant professor of accounting at the University of Iowa when his book was published in 1934. Wade in part developed this book while teaching engineering students. It is intended as a survey/short course with 275 pages in 16 chapters.

Thus, Kester, Rorem, McKinsey, and Finney's texts, ranging from 552 to 634 pages in length, are intended for a year's study while Howard, Lamberton, and Wade's texts, ranging from 243 to 297 pages, are intended for a single-term. Two of the full-year texts are intended for business students while the other two full-year texts are intended for business and other students. Interestingly, Lamberton and Wade's single-term texts, while possibly used by business students, are also intended to be appropriate for non-business students. Lamberton suggests that his book could be used in introductory accounting courses for arts and science students while Wade suggests that his book could be used by engineering students. On the other hand, Howard specifically intends his book for economics/liberal arts students. These results are consistent with the literature of the time that reflected a variety in the type of students, programs, and schools. None of the books in their prefaces or elsewhere state that they are intended exclusively for accounting majors.

Are the books preparer or user oriented?

Are the books more oriented to the preparation of accounting information or the use of it? The short answer is that all of the books are preparer oriented, going into bookkeeping and accounting process details. However, there are variations. At one extreme is Kester's text. His text is definitely oriented towards preparers, including many practical details of ledgers, journals, and business documents. He even goes so far as discussing who gets what copy of a bill of lading! Other practical details are described and illustrated such as the types of rulings that should be made as well as the color of ink that should be used.

Rorem's book is clearly the most user oriented of the successful books. His book is divided into four parts. While Part II is preparer oriented, Part I and especially Part IV are mostly user oriented, emphasising how accounting information is displayed and can be used. Part I briefly considers the use of accounting information, which Rorem describes as inherently quantitative, by many different types of entities - noting that it is especially useful to business enterprises. In Part IV he provides descriptions of financial statement classifications that go into considerable detail as well as different forms of financial statements including tabular, graphic, detailed, and condensed. Rorem reproduces financial statements in his book from companies such as Coca-Cola and North American Manufacturing and also includes the financial statement formats recommended by the FRB in 1917. He believes financial statements should exhibit the qualities of simplicity, completeness, comparability, and clearness. Ratios, averages, and trends are discussed.15 Comparative balance sheets are illustrated as well as a statement of sources and application of funds on a working capital basis. He includes a chapter on uses of cost data and related problems involving indirect expenses and joint costs. The final chapter touches on fund accounting, regulation by government of organisations such as public-service (utility) corporations, and the accounting profession. In so doing, he makes reference to various government agencies such as the FTC, United States Tariff Commission, Bureau of Internal Revenue, the United States Chamber of Commerce, and, more generally, throughout his book he references other authors such as Robert H. Montgomery and William A. Paton.

The other two full-year texts are mostly prparer oriented. McKinsey's book is very procedure oriented with little emphasis on other than common valuation methods. Unlike Rorem, alternatives are not usually considered and references to other authors/sources are not made. McKinsey uses many examples, some numeric and some involving T-accounts showing in words the transactions that would affect various accounts. Again, like Kester, McKinsey includes extensive detail on business forms and documents such as vouchers, notes, drafts, invoices, and so on. On the user side, McKinsey includes a chapter on analysis that includes descriptions of typical accounts and their usual valuation and a chapter on interpretation that includes common size financial statements and a limited number of ratios.

Finney's book is very practical with procedures explained in detail and showing many examples along with illustrations of business documents. At times, his exposition is little more than an outline. The text is obviously preparer oriented with little attention paid to alternative valuation possibilities or references to other sources. As part of a final chapter dealing with miscellaneous topics, Finney has a discussion on financial analysis along with comparative statements and several financial ratios.

Somewhat surprisingly, the single-term texts also have a strong preparer orientation, despite trying to serve economics/liberal arts and engineering students. Perhaps, Howard does the best, though limited, job in providing a user orientation. While he intended to place more emphasis on principles rather than procedures, Howard emphasises the details of bookkeeping and the appropriateness of accounts in the context of historical cost, rather than the larger conceptual issues of valuation. The examples that he provides are typically long showing T-accounts (some in words) and/or journal entries. On the user side, at the beginning of the book Howard identifies those interested in financial statements and emphasises the importance of the balance sheet and the statement of revenue and expense. An especially interesting feature of the book is the inclusion of financial statement formats as required/suggested by governmental bodies such as the FTC, Interstate Commerce Commission, FRB, and the Internal Revenue Service. In his final chapter, Howard discusses valuation accounts, and whether or not they really reflect net worth, and different types of ratios that may be calculated. Nevertheless, Howard's text is mostly a description in words of basic accounting procedures.

Like Howard, Lamberton intended to focus on principles. Yet, the book is oriented to bookkeeping (the author would probably disagree). The material is usually illustrated throughout using journal entries, T-accounts, and other means such as special journals, work sheets, and financial statements. The exception to this procedural orientation is when the focus is on the financial statements in the beginning, the second chapter, and the final chapter. In that final chapter, Lamberton discusses the classification of the financial statements and the valuation of the individual items. Also in this final chapter, the author briefly discusses financial ratios and comparative financial statements.

Wade's book is preparer oriented. In fact, in his preface he states that he desires to provide "full treatment" of the accounting cycle. The book has numerous examples, makes some references to other authors (for example, Finney), and has illustrations of some business documents. Unique among the successful texts, Wade includes financial ratios when he introduces the financial statements near the beginning of the book.

Although there are exceptions in parts, overall these textbooks tend to be practical treatises on bookkeeping and financial statements, but it is doubtful that the authors would have considered them as such. With possibly the exception of Rorem, the word "theory" seems for the most part to have implied explanations of procedures whereas a "bookkeeping" approach, disdained by university educators, seems to have implied learning by example without explanations.

How is the accounting cycle presented?

The books use two basic approaches to presenting the accounting cycle. The balance sheet approach starts with the financial statements and works backwards to the bookkeeping details. The journal entry approach starts with the bookkeeping details and works forward to the financial statements. Of the successful books considered here, five of the books employ the balance sheet approach while two use the journal entry approach.

Kester apparently first introduced the balance sheet approach in the following manner. After a short history of accounting, he begins his book with the proprietorship equation (assets - liabilities = proprietorship) that he expands into the financial statement (balance sheet). Next he introduces the revenue and expense statement (income statement) and shows its relationship to the balance sheet. He proceeds essentially backwards through the accounting cycle, starting with accounts, expanding to the ledger, trial balances, adjustments, and closing entries. He concludes this portion of the text with a detailed description of the balance sheet and income statement.

Kester next introduces journals, starting with a basic journal that is then broken up into the subsidiary journals of purchases, sales, cash (both receipts and disbursements), and a general journal. He goes on to discuss business documents such as sales invoices and negotiable instruments, giving the legal details. Posting is then explained. This is followed by trial balances, adjusting, correcting, and closing entries, and the account and report forms of the financial statements. Finally, a detailed classification of accounts on the financial statements is provided as well as practical details of the ledger.

As noted, Kester's balance sheet approach was novel at the time (Lawton, 1917). However, this approach met with the approval of Littleton (1923) and others used it or variations of it including McKinsey, Howard, Lamberton, and Wade.16 In fact, both Jackson (1926) and Schmidt (1928) claim that this approach had became nearly universal.

Rorcm and Finney, however, provide at least two exceptions to the balance sheet approach. Rorem in Part II of his text uses the journal entry approach which goes through the accounting cycle forward as performed in practice. After introducing the balance sheet equation (assets = property rights or, equivalcntly, assets = liabilities plus proprietorship), Rorem discusses the account, the journal, and the ledger. Typical balance sheet and income and expense accounts are described, followed by adjustments, closing entries, and a work sheet. The financial statements are then described in detail including both account and report forms of the balance sheet as well as single and multiple-step income statements. He concludes this part of the book by discussing what he calls specialised classifying devices including special columns in the journal, control accounts, special journals, and special accounts for partnerships, corporations, and manufacturers.

Finney's variation of the journal entry approach is interesting in that he gets through a basic accounting cycle in three chapters and in less than 35 pages, sketching the framework and filling in the details later. Although the balance sheet is briefly introduced after discussion of the accounting equation (assets = liabilities + net worth), detailed financial statements are presented at the end of the cycle, rather than following Kester's approach. Interestingly, Finney starts with a corporation rather than a sole proprietorship.

Next, he introduces merchandising activities and the related accounts. He then discusses special journals, freight, cash discounts, and financial statements incorporating these and other items. A surplus statement is also included. After a discussion of negotiable instruments (including examples of documents), he then considers adjusting entries in greater detail. It is at this point (end of chapter 10) that he presents detailed financial statements. Later, he returns to special journals for an expanded treatment.

Thus, Rorem and Finney not only took a different approach from Kester and the others, but offered variations on the journal entry approach. Rorem's variation tends to go through each stage of the accounting cycle once while Finney saves some of the details for later. Finney also includes many practical details while presenting the accounting cycle.

Are alternative valuation methods presented?

Again, the successful books exhibit a range of approaches. To gauge this range, as noted, the focus here is on inventory and depreciation methods. Other details on valuation are also presented.

At the lower extreme, Kester does not discuss fundamental issues of valuation. Inventory pricing using different cost flow assumptions is not addressed and depreciation of fixed assets is determined by appraisal, despite the need by 1917 for depreciation methods based on cost, at least for tax purposes.

At the other extreme, Rorem in Part III of his text considers the valuation of balance sheet items and the determination of net profit. This is a quite detailed theoretical discussion considering many aspects that are still relevant today. For example, the discussion of merchandise inventory includes valuation using simple average, weighted average, first-in, first-out, most recent invoice price, replacement cost, as well as selling price less estimated selling costs and the retail method. Lower of cost or market is explained along with its related display issues in the balance sheet. In the discussion of the valuation of fixed assets, Rorem includes the idea of the present value of future services though noting that accountants use cost as an approximation to this value. He also discusses how to record appreciation and reproduction cost. Under depreciation methods he includes straight-line, sinking-fund, fixed-percentage-of-diminishing-balance, and unit of service (or output).

The other books use a variety of approaches between these two extremes. Finney is just a cut above Kester. Finney calls FIFO by name but it is the only inventory costing method illustrated and he only discusses straight-line depreciation.

McKinsey's discussion of inventory valuation throughout the text is limited to lower of cost or market without mention of different ways of calculating cost and he limits his discussion of depreciation to the straight-line method in the main text. In an appendix different depreciation methods including reducing-fraction (sum-of-the-years' digits), diminishing-value (declining value) and sinking fund are briefly presented. And, as noted, McKinsey does have a chapter near the end of his text that discusses typical accounts and their valuation.

Wade has a somewhat expanded consideration of alternative valuation approaches. Though inventory valuation is stated as the lower of cost or market without describing how cost is determined, the depreciation methods considered include straight-line, working-hours/production-unit, and reducing charge (sum-of-the-years' digits), and in a related graph he also shows how market value and the efficiency of the asset change with time (which might have special appeal for engineering students). He demonstrates how to record replacement cost of a building and the related depreciation in the accounts.

Lamberton devotes part of his final chapter to valuation issues. In general, the author believes assets should be recorded at cost (less depreciation where appropriate) with market values shown parenthetically. Lamberton prefers this even to the lower of cost method for inventory. However, with respect to inventory, different cost flow assumptions are not discussed. As for depreciation, Lamberton only illustrates the straight-line method though he does discuss the rationales of other approaches.

Howard has an interesting approach, perhaps appropriate for economics/liberal arts students taking a single accounting course. He discusses different ways of calculating inventory, but no numbers are used and he does not name the various methods (for example, LIFO, FIFO, and average cost). Similarly, for depreciation he does discuss the common methods (for example, straight-line, reducing (declining) balance, sum-of-the-years' digits, and sinking fund) but leaves the calculations to a footnote, relying instead in the main text on a diagram showing the declining value of a depreciable asset's book value as a function of time.

In summary, Howard and Rorem consider alternative inventory costing methods. And five of the authors go beyond straight-line depreciation with Wade and Rorem illustrating different methods in the main text of their books. Thus, even among the successful authors, a variety of approaches were employed.

What is their problem material like?

An important aspect of a text is the problem material, or the questions, exercises, problems, sets, and so on, available for the students. Interestingly, although there are some minor differences, the problem material among the successful texts tends to be similar despite the different audiences, orientations, and so on. That is, the chapters in the various books tend to have 6-12 questions and 1 -3 problems. The questions tend to be straightforward involving definitions/short answers while the problems tend to be applied and contain some long practice sets. As examples, each chapter of Kester's book is typically accompanied by two or three problems involving bookkeeping procedures and financial statements. Some of the problems are "practice data", or practice sets that are quite long and extend over several chapters. Appendix A of the book includes about nine short review questions for each chapter while Appendix B includes additional problem material for selected topics. For McKinsey, the chapters are typically accompanied by ten or so questions/exercises ("problems for class discussion") and by two or three "laboratory problems".

Rorem's approach is to have questions at the end of the chapters (around nine) involving short answers and definitions. Somewhat surprisingly, given the valuation and user sections of his text, the problems at the end of the chapters and the laboratory exercises at the end of the book (together, about two per chapter) are mostly straightforward and reinforce practical applications. Also surprising, Howard takes an applied approach to the problem material despite the economic/liberal art student audience for his book. The exercise material (only 26 exercises in all) tends to be very procedural and lengthy and, as an exception to the other successful texts, there are no questions.

An interesting feature by Finney is his inclusion, in most of his last ten chapters, of an ongoing practice set involving one company over two months. Some of Finney's problems are quite long involving numerous transactions and statement preparations. Of special note is Finney's description of partially completed working papers that accompany the text and that he describes in his preface. As other interesting features, Lamberton's last of three chapters on corporations is essentially a long problem while Wade at the conclusion of his discussion of the accounting cycle provides an extended review problem.

Perhaps the most remarkable fact about the problem material is the lack of it. There are relatively few questions and very few problems. While the latter can be made up to some extent by practice sets, nevertheless the texts provide little to choose from. Contemporaries apparently were also concerned with this lack of materials. Schmidt (1928), for example, maintained that students were not doing enough problems. Nor did he think that just talking about accounting was sufficient, concluding (p. 184, emphasis in original) "But insofar as it leads toward new methods of understanding without doing it is pedagogically fallacious".

Are there other unique aspects of the texts?

The authors also differ with respect to other items. As examples, Kester, McKinsey, and Lamberton in the closing process derive cost of goods sold in the purchases account while Rorem and Howard use a separate cost of goods sold account.17 However, Finney and Wade do neither, closing/adjusting the accounts involving cost of goods sold directly to the profit and loss account. Interestingly, McKinsey and Lamberton, unlike the others, derive gross profit in the sales account. Also, in the adjustment process, only Kester and Howard make entries carrying forward the balance of so-called "mixed" accounts (for example, supplies expense) without actually setting up the related asset or liability account (for example, supplies). All of the others make adjusting entries as taught today, explicitly separating the expense from the asset (for example, using both a supplies expense and supplies account) or the revenue from the liability.

The books also differ on topical coverage (beyond that noted in Tables 3 and 4). While Howard and Wade briefly discuss partnerships and corporations as part of a single chapter, the others each devote two to several chapters on these topics. In another case, as shown in Table 3, neither Kester nor Lamberton discuss cost accounting. Howard, McKinsey, and Finney devote a single chapter to the topic covering the basic ideas of a manufacturer's accounts and the related journal entries. Rorem does this as well, but, not surprisingly, includes an additional chapter on the uses of costs, different types of costs, and cost allocation. Wade, writing for future engineers, includes two chapters (of his 16 chapters) on cost accounting as well as part of another on subsidiary ledgers.

An interesting feature of Howard's book is the inclusion of two chapters that discuss interest on notes and bonds. Unique among the successful authors, present value calculations, the related tables, and journal entries for interest are included. The other authors either only briefly mention bonds and accounting for interest based on present values, perhaps including a short example using straight-line amortisation, or fail to discuss the issues altogether (for example, Wade and Kester, with the latter only defining compound interest).

Summary, conclusions, and suggestions for further research

So, were early twentieth century first-year accounting textbooks in the United States all alike? Although there are some similarities, the books are different. This is not surprising giving the nascent nature of accounting education. The texts were developed as accounting courses proliferated along with the need for more accountants, business managers, and government officials in an expanding industrial society.

The successful texts included in this study are different in several ways. First of all, the books can be divided into those intended for a year's study and those intended for a semester's study. Secondly, the books were written to serve a variety of students, including accounting, business, and others. Most students in early accounting courses were not accounting majors and the authors were undoubtedly influenced by this variety. This is especially evident among the semester texts that were intended, at least in part, for economic, liberal arts, and engineering students. Hence, the authors were trying to serve different types of students.

Given the variety of students and the need for a user's orientation, it is somewhat surprising that, except to some extent for Rorem, the successful texts are similar in that they each had a preparer's orientation. While some of the books may have devoted a chapter or two to understanding and using financial information, for the most part the books were devoted to procedural details. Some of the books went to the extreme of including discussions of who gets what copy of a bill of lading (for example, Kester). Moreover, even Rorem's text devotes a substantial portion to procedural details.

This preparer orientation occurs despite several of the authors' desire to discuss principles and theory. Along these lines, Horner (1922, p.44) in discussing the need for theory claims "[p]ractice without an understanding of the reasons for the operation is not ... real education". However, as noted, it seems that theory for the most part in the early twentieth century more or less meant providing explanations of procedures as opposed to valuation or measurement issues. Contemporaries of the authors were also critical. For instance, Greer (1933) thought there was too much emphasis in the first course on technical features of bookkeeping including special journals and bookkeeping mechanics such as posting reference and rulings.

Pedagogically, the successful texts also differed. While most of them (and, more generally, texts of the time) used the balance sheet approach introduced by Kester to present the accounting cycle, Rorem and Finney were exceptions, employing the journal entry approach. In addition, although most of the books are organised around the accounting cycle and the tasks to be performed, two of the books (Rorem & Finney) have subsequent sections that are organised by topic (for example, receivables, inventories).

The texts also differed in respect to alternative valuation possibilities, ranging from essentially none to considering several inventory, depreciation, and other valuation issues. Hence, the texts could be used in rather perfunctory courses through to ones emphasising more theoretical issues. The books also employed different bookkeeping details and emphasised different topical coverage.

On the other hand, the texts had other similarities. In addition to addressing the accounting cycle on a very procedural basis, there was a similar amount of problem material available in each of the texts. The chapters average less than a dozen questions and less than three problems. These absences account, in part, for the brevity of the texts. Even the texts meant for yearlong study are relatively short (the longest among them is only 634 pages). In addition the questions tended to be straightforward while the problems could be lengthy and were generally procedurally oriented. This was the case even in Rorem's text as well as Howard's text written for economic/liberal arts students.

Another surprising aspect was the lack of managerial/cost topics. This was brought out by both the overview of all the sample books as well as the more detailed analysis of the successful texts. Typically, only one or two chapters, at most, were devoted to cost/managerial topics. Interestingly, McKinsey (1920) makes a case for the initial accounting course in the undergraduate curriculum to have a business management perspective, but this approach was not adopted. Similarly, Greer (1928, 1933) argues that the first course should include cost accounting as well as budgets and standards. Winter (1933) is even more specific. He suggests that "elementary accounting" and "elementary cost accounting" be combined into "principles of accounting". Winter attributes this suggestion, several years prior to his article, to Professor A.C. Littleton of the University of Illinois, and to, independently, Professor Ross G. Walker of Harvard.

But despite these similarities, this study shows obvious differences between early first-year accounting textbooks in the US. Instructors of the early twentieth century could choose distinctly different texts for their students. Different approaches and topics were available. There was not only one type of book for students in first-year accounting courses, but a rich variety to serve diverse majors, programs, and schools.

Lastly, this study suggests several additional research questions. When were cost/managerial topics added, numerous questions/problems included, and procedural details reduced? What were the other causes of the lengthening of the texts (standards promulgated by rule-making bodies, exhibits, photographs)? Did Rorem, McKinsey, and/or other authors later try more of a user approach and when did texts become more commonly organised around topics rather than procedures? Answers to these questions would help explain the development of first-year accounting textbooks over the years.