The accountant has determined that the following adjustment should be made in the entity's account for the year ended 30 december using an accrual-based system.

a. An annual premium of $3,000 paid to the Insurance Company on 1 January. b. Income earned but not invoiced totaling $18,000c. Cash received for applications not yet developed of $6,000 d. Equipment depreciation expense of $5,000e. Unpaid wages and salaries of $2,000 Required:analyse: 1. The nature of the adjustment that needs to be made! 2. Whether the profit for the reporting period would have been under or overstated without theadjustment occurring