Effect of Omitting Adjusting Entry The adjusting entry for accrued wages was omitted at July 31, the end of the current year. Indicate which items will be in error, because of the omission, on (a) the income statement for the current year and (b) the balance sheet as of July 31. Also indicate whether the items in error will be overstated or understated.

a. Income Statement Wages Expense , Net Income

b. Balance Sheet Wages Payable , Stockholders' Equity