An entity pays wages on a fortnightly basis and the next payroll date is 8 July. If wages expense is not accrued at 30 June the effect on the financial statements for June will be:

1 an understatement of assets and profit

2 an overstatement of liabilities and an understatement of profit

3 an understatement of liabilities and an overstatement of profit

4 an overstatement of assets and profit

an overstatement of assets and profit