The Payment of $15,000 for Expenses Was Recorded by Spears

Multiple Choice

The payment of $15,000 for expenses was recorded by Spears Co. as an increase in cash of $15,000 and a decrease in retained earnings of $15,000. What is the effect of this error on the accounting equation?

A) Total assets will exceed total liabilities and stockholders' equity by $15,000.
B) Total assets will exceed total liabilities and stockholders' equity by $30,000.
C) Total assets will be less than total liabilities and stockholders' equity by $30,000.
D) The error will not affect the accounting equation.