Tricks that have been noticed so far.

[Hodgeyhodgey]

I think the question was talking about owner's equity effect and not stock directly. Even if the drawings wasn't recoreded, the stocktake would had dected a a stockloss or decrease in stock gain. Therfore in anyway possible onwer's equity will still be decreased by whatever the amount was. It's just that net profit would be overstated and onwer's equity would stay the same as it's still being decreased. Stock control wouldn't be overstated as there is a loss in anyway possible as well. Decrease in stock gain or drwaings of stock. It still involves a loss.

Enough of this and just move on with unit 4.

+1
Totally given up on figuring out how much I got wrong, might as well just complete Unit 4 and prepare for the next exam to make sure those stupid mistakes don't happen again.

[123456k]

my bad net profit understated. agreed

[Hellhole]

EDIT: Eff. If only I thought of a physical stock take.

Net Profit would be understated due to stock loss and Drawings understated by the same amount. Still would mean OE would be understated and A understated. Makes sense.

[nacho]

EDIT: Eff. If only I thought of a physical stock take.

Net Profit would be understated due to stock loss and Drawings understated by the same amount. Still would mean OE would be understated and A understated. Makes sense.

I'm not exactly sure what just happened in the above 4 or so posts.
but, just to clarify, the answer to 1.3.5 is no effect.

[ech_93]

I spoke to my teacher about it again today, and he is adamant that it is overstated.

[nacho]

damn double post, cant delete?

[nacho]

He must have interpreted the question incorrectly
becauuuuse, the following:
- the business will conduct a stock take at the end of the reporting period
- the end of the reporting period is 30 june 2011

And
If we withdrew the stock, our drawings will increase by $x, and owner's equity decrease by $x.      [scenario 1]
However, if we do not record this, our drawings is understated by $x and owner's equity is overstated by $x.        [scenario  1a]

BUUUUT
using, the info i had listed above.
we will conduct a stock take, identify a stock loss of $x, which is an expense, and will decrease owner's equity by $x. [scenario 2]
NOW if we compare
[scenario 1] to [scenario 2]
they are the same. - YES, THE OWNER'S EQUITY HAS DECREASED, BUT! the effect of not recording the drawings, has no effect on the owner's equity,
because: If we record the transaction, OE decreases by $x. If we do NOT record the transaction>>stocktake>> OE decreases by $x
That's what the question is asking for. I think your teacher stopped at [scenario 1a]