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The relation of accounting to economics has been the subject of discussion a number of times, but no program devoted to accounting relationships would seem complete without some expression on the subject of economics. The economist and the accountant have been members of the same family for a number of decades, since the early period in which economics permitted this fledgling to enter the liberal arts colleges under the shadow of its protecting wing. They later became chief partners with business law in the organization of curricula in business and schools of business. However, there are many indications that the two fields are coming closer to a mutual understanding. Economics is developing most rapidly in the field of statistics and statistical method and in this type of study is reaching more and more into fields hither-to largely the habitat of the accountant. Also, finance and marketing, among others, are studying problems closely connected with accounting and in which the accountant is apt to contribute much of the useful material.

The most widely enunciated principle of income determination is that income is realized as the result of the sale of commodities or services. Concepts of "income" and "cost" are two of the most difficult in the whole field of economics and accounting to define in precise terms. Many incomes are earned as the result of the joint operations of two different fiscal periods, since only part of the services for which the final price is paid by the purchaser are performed in each period and part of the costs of furnishing these services falls into each. With the wide diversity found in different enterprises in methods of sale, types of sales contract, methods of production, and in collection methods it would seem reasonable to assume that no single test of income realization would meet all situations with the same degree of satisfaction. Accounting texts admit a number of situations which may need exceptional treatment but the number and importance of these situations is seldom accented and usually there is no open admission that another test of income has been applied. The author points out a wider range of business conditions and situations in which the sale test must be modified or other more adequate tests applied to arrive at the best measure of periodic profits, or of changes in economic positions.

At a Chicago, Illinois, meeting in 1926 one session was a roundtable on examinations in elementary accounting and the interest displayed in that program suggested that further discussion of the same topic would be welcomed. This session is therefore devoted to the subject of examinations but will consider examinations at the different levels, elementary accounting, advanced accounting, and the postgraduate C.P.A. examinations. At the Chicago meeting considerable interest was disclosed in the subject of objective examinations in elementary accounting, and it seemed at that time that the department at Minnesota had gone farther than most departments in the use of such examinations. President of the association has therefore asked the author to have a member of the staff present some materials, which they have developed in that form. A good many instructors still feel skeptical about the adaptability of this form to the held of accounting and it is hoped that this discussion will give some idea of the various types of questions which may be used and how the usual criticisms against this form may be eliminated. Objective questions are more difficult to prepare than problems and it takes a number of years of experimentation and improvement to obtain satisfactory questions and to remove flaws which necessarily appear in first attempts in this direction.