On December 31, 2010, the Molly Company Recognized $12, 000

Multiple Choice

On December 31, 2010, the Molly Company recognized $12, 000 in revenue from rent of $5, 000 due in 2011 and $7, 000 due in 2012, all collected in advance from another company.Ignoring income taxes, if this error is not detected

A) Retained Earnings at December 31, 2011, will be overstated by $7, 000
B) Retained Earnings at December 31, 2011, will be understated by $7, 000
C) Retained Earnings will be overstated by $12, 000 until the error is discovered
D) Retained Earnings at December 31, 2011, will be understated by $12, 000