During the Year 2011-2012, the Value of Closing Inventory Was

Multiple Choice

During the year 2011-2012, the value of closing inventory was overstated by ` 25,000. Which of the following is true?

A) The cost of goods sold was overstated during 2011-2012 and income will be understated during 2012-2013
B) The income was overstated during 2011-12 and closing inventory will be overstated during 2012- 2013
C) The retained earnings was overstated during 2011-2012 and retained earnings will be understated during 2012-2013
D) The cost of goods sold was understated during 2011-2012 but retained earnings will not be affected during 2012-2013