The payment of $10,000 for expenses was recorded by Spears Co. as an increase in cash of $10,000, and a decrease in retained earnings of $10,000. What is the effect of this error on the accounting equation?
a) Total assets will exceed total liabilities and stockholders' equity by $20,000.
b) Total assets will exceed total liabilities and stockholders' equity by $10,000.
c) Total assets will be less than total liabilities and stockholders' equity by $20,000.
d) The error will not affect the accounting equation.