Response to the following questions:
1. The adjustment for accrued fees was omitted at October 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 October 31. Also indicate whether the items in error will be overstated or understated.
2. At the balance sheet date, a business owes a mortgage note payable of $775,000, the terms of which provide for monthly payments of $4,150. Explain how the liability should be classified on the balance sheet.