A Receipt of $15,700 Cash from a Customer as a Payment

Multiple Choice

A receipt of $15,700 cash from a customer as a payment on account was incorrectly credit to service revenue. Which is the effect of this error on the company's financial statements?

A) Assets are overstated by $31,400 and owners' equity is overstated by $31,400.
B) Assets are understated by $15,700 and owners' equity is understated by $15,700.
C) Assets are understated by $15,700 and liabilities are understated by $15,700.
D) Assets are overstated by $15,700 and owners' equity is overstated by $15,700.
E) Assets are understated by $31,400 and liabilities are understated by $31,400.