At December 31, 20x8, the books of Leslie Inc. contained the following error:

The company failed to accrue wages for the last 3 days of December 20x8 in the amount of $5,000.

Which of the following statements correctly describes the impact of the error on the December 31, 20x8 financial statements of Leslie?

Select one:

a. Expenses are understated, liabilities are understated, and shareholders equity is overstated

b. Expenses are understated, liabilities are understated, and shareholders equity is understated

c. Expenses are understated, liabilities are understated, and there is no impact on shareholders equity

d. Expenses are overstated, liabilities are understated, and shareholders equity is overstated