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 understated by $15,700 and owners' equity is understated by $15,700.

b.

Assets are overstated by $31,400 and owners' equity is overstated by $31,400.

c.

Assets are overstated by $15,700 and owners' equity is overstated by $15,700.

d.

Assets are understated by $15,700 and liabilities are understated by $15,700.

e.

Assets are understated by $31,400 and liabilities are understated by $31,400