If the Beginning Inventory for 2006 Is Overstated, the Effects

Multiple Choice

If the beginning inventory for 2006 is overstated, the effects of this error on cost of goods sold for 2006, net income for 2006, and assets at December 31, 2007, respectively, are

A) overstatement, understatement, overstatement.
B) overstatement, understatement, no effect.
C) understatement, overstatement, overstatement.
D) understatement, overstatement, no effect.