X Company prepares annual financial statements. It rents space in a large office complex. On January 1, 2014, it paid rent for 2014 and 2015. The accountant recorded the proper entry on January 1, 2014 but failed to record the proper adjusting entry on December 31, 2014. What will be the effect on the 2014 financial statements?
a.Total equities on December 31, 2014 will be correct; total expenses for 2014 will be understated.
b.Total equities on December 31, 2014 will be correct; total expenses for 2014 will be overstated.
C.Total equities on December 31, 2014 will be overstated; total expenses for 2014 will be understated.
D.Total equities on December 31, 2014 will be understated; total expenses for 2014 will be understated.
E.Total equities on December 31, 2014 will be understated; total expenses for 2014 will be overstated.
F.Total equities on December 31, 2014 will be overstated; total expenses for 2014 will be overstated.