Accrued salaries owed to employees for October 30 and 31 are not considered in preparing the financial statements for the year ended October 31 . Indicate which items will be erroneously stated, because of the error, on (A) the income statement for the year and (B) the balance sheet as of October 31 . Also indicate whether the items in error will be overstated or understated. a. Income Statement SalariesExpenseNetIncomeXX b. Balance Sheet Salaries Payable X Stockholders' Equity X Feedback V Check My Work In essence, this mistake results in failing to record part of the salaries expense and their corresponding liability. The effect of omitting an adjusting entry on Net Income is the same as the effect on Stockholders' Equity. Also, keep in mind that the accounting equation is a depiction of the balance sheet, so understated liabilities will result in overstated Stockholders' Equity