A Receipt of $12,600 Cash from a Customer as a Payment

Multiple Choice

A receipt of $12,600 cash from a customer as a payment on their account wasincorrectly credited to Rent Revenue. What is the effect of this error on the financial statements of the company?

A) Assets are overstated by $25,200 and owners' equity is overstated by $25,200.
B) Assets are overstated by $12,600 and owners' equity is overstated by $12,600.
C) Assets are understated by $12,600 and liabilities are understated by $12,600.
D) Assets are understated by $25,200 and owners' equity is understated by $25,200.
E) Assets are understated by $12,600 and owners' equity is understated by $12,600.