If a Company Overstates Its Ending Inventory Balance for 2017

Short Answer

If a company overstates its ending inventory balance for 2017 by $10,000, and understates its ending inventory balance for 2016 by $5,000 what are the effects on its net income for 2017 and 2016? ​ $\begin{array}{cc}\text { Effect on } 2017 \text { Net Income } & \text { Effect on } 2016 \text { Net Income } \\\hline \text { a. Understated by } \$ 5,000 & \text { Overstated by } \$ 10,000 \\\text { b. Overstated by } \$ 15,000 & \text { Understated by } \$ 10,000 \\\text { c. Overstated by } \$ 15,000 & \text { Understated by } \$ 5,000 \\\text { d. Overstated by } \$ 10,000 & \text { Understated by } \$ 5,000\end{array}$