Important questions

[nacho]

Re: perpetual system of recording stock.
If a question has given that "the business uses the perpetual recording of stock method"
at the beginning of the question and later asks:
"show the effect if drawings of $200 had not been recorded"
under/overstated/no effect.
Would we write:
assets = overstated
liabilities = no effect
oe= overstated
OR would everything be"no effect"
as the business would conduct a stocktake at the end of the reporting period?

Thanks

[luffy]

I think they are referring to the immediate effect, instead of the overall aftermath.

Therefore, I would write overstated, no effect and overstated.

However, I have in fact seen a question that stated "effect at the end of the reporting period". Therefore, it would be no effect for all of them; for only this particular question, we were required to state the individual elements that were affected (i.e. stock loss and drawings). Therefore, it would in fact be that stock loss was overstated and drawings was understated, which would affect decision-making.