The accountant for We Fly Cheap Airlines forgot to make an adjusting entry at the end of the year to record the portion of unearned revenues that were earned before year-end. What effect did this omission have on the company's financial statements?

A. Overstated assets and retained earnings.

B. Understated assets and retained earnings.

C. Overstated liabilities and understated retained earnings.

D. Understated liabilities and overstated retained earnings.