If Beginning Inventory Is Understated by $10,000, the Effect of This

Multiple Choice

If beginning inventory is understated by $10,000, the effect of this error in the current period is
$\begin{array}{ll}\text { Cost of Goods Sold }&\text { Net Income }\\\end{array}$

A) $\begin{array}{ll}\text { Understated } & \text {\quad\quad Understated } \\\end{array}$

B) $\begin{array}{ll}\text { Overstated } & \text {\quad\quad\quad Overstated } \\\end{array}$

C) $\begin{array}{ll}\text { Understated } & \text {\quad\quad\quad Overstated } \\\end{array}$

D) $\begin{array}{ll}\text { Overstated } & \text {\quad\quad\quad Understated }\end{array}$