The accountant for Exeter Corp. failed to make the adjusting entry to record depreciation for the current year. The effect of this error is which of the following?

a. Assets, net income, and shareholders’ equity are all overstated.

b. Assets and expenses are understated; net income is understated.

c. Net income is overstated and liabilities are understated.

d. Assets are overstated, shareholders’ equity and net income are understated.