Answer the following question:

A company has a December 31, 2020 year end. The company estimated that they used $980 of utilities during December but no entry was made. Which of the following statements is CORRECT (TRUE) about the December 31, 2020, financial statements? Note that understated means too low and overstated means too high.

a) At year end liabilities will be overstated and net income will be understated.

b) At year end liabilities will be overstated and net income will be overstated.

c) This will have no effect on the year end financial statements.

d) At year end liabilities will be understated and net income will be understated.

e) At year end liabilities will be understated and net income will be overstated.