Posted on 7th Jul 2010 @ 7:28 AM

By Paul Lambers

Since the CPA Exam was first offered over a century ago, hundreds of accounting topics have had to be revised, updated, added or removed from the CPA Exam content.  Students have had to adjust their studying to adequately prepare for these changes.  Similarly, CPA Review Courses have to revise their content in order to help the CPA candidate study the correct materials.  It is a scenario that happens year after year in the accounting world.

Beginning in 1993 there have been two exam re-structures, the additions of Economics and Finance in the BEC section, and countless changes in the Tax, FAR and Auditing sections.  Lambers CPA Review professors have always been busy updating the course to reflect all these changes.  Updating is a key component to Lambers CPA Review Course and essential to the success of the CPA candidate!

You may enjoy reading an excerpt from the very first CPA Exam, offered in New York State in December 1896.  It is a Theory of Accounts question with a full explanation.  See if you can get the answer.

I. State the essential principles of double entry bookkeeping and show wherein it differs from single entry bookkeeping.

Answer: The essential principles of double entry bookkeeping are, (1) The record of every transaction involving the transfer of money or its equivalent must appear on both the debit and credit side of the ledger, thus maintaining it in balance. (2) Provision must be made for the constant differentiation under properly classified accounts of capital and revenue income and expenditure. (3) As resulting therefrom, the profit or loss determined from the collection of the preponderance of the balance of the revenue accounts must be proved by the excess of the assets over the liabilities as exhibited in the balance sheet.

The fundamental difference between single and double entry bookkeeping is this: In single entry the income and expenditure accounts are not kept, and the profit or loss for any given period is determinable solely from a comparison of the assets with the liabilities—the excess of the one over the other showing the profit or loss; the proof of the accuracy of same, though the same result being arrived at through the profit and loss account being entirely wanting.

Of minor importance also is the fact that the mathematical accuracy of the posting is in single entry bookkeeping undemonstrable in trial balance form, as in double entry.

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