The accountant at AppsGalore, a technology business, has determined that the following adjustments should be made in the entity’s accounts for the year ended 30 June using an accrual based system:

1. Income earned but not invoiced totalling $21000
2. Unpaid wages and salaries of $1150

3. equipment depreciation expense of $5200
4. cash received for applications not yet developed of $4000
5. an annual insurance premium of $1500 paid to the Insure Company on 1 January.

Required

For each item analyse:
a. the nature of the adjustment that needs to be made (e.g. prepaid expense, accrued income, income received in advance or accrued expense)
b. whether the profit for the reporting period would have been under- or overstated without the adjustment occurring.