Answer:
In the income statement,
Wages expense account (expenses) - understated
Net income - Overstated
(b) In the balance sheet
Accrued wages (liability) - Understated
Owners equity - Overstated
Explanation:
Accrued wages refers to wages tat have been incurred by an entity that are yet to be paid. it is a liability. To recognize this in the book, debit the wage expense account and credit accrued wages.
Hence, omitting accrued wages would mean that the corresponding wage expense would have been omitted. This would result in an understatement of expenses, an overstatement of net income in the income statement.
In the balance sheet, because the accrued wages account is a liability account, the liabilities would be understated while the owners equity would be overstated (due to the overstatement of net income).
