Ending Inventory for the Current Accounting Period Is Overstated by $2

Multiple Choice

Ending inventory for the current accounting period is overstated by $2 700.What effect will this error have on Cost of sales and Net profit?

A) $$\begin{array} { | c | c | } \hline \text { Cost of sales } & \text { Net profit } \\\hline \text { Understated } & \text { Understated } \\\hline\end{array}$$
B) $$\begin{array} { | c | c | } \hline \text { Cost of sales } & \text { Net profit } \\\hline \text { Overstated } & \text { Overstated } \\\hline\end{array}$$
C) $$\begin{array} { | c | c | } \hline \text { Cost of sales } & \text { Net profit } \\\hline \text { Overstated } & \text { Understated } \\\hline\end{array}$$
D) $$\begin{array} { | c | c | } \hline \text { Cost of sales } & \text { Net profit } \\\hline \text { Understated } & \text { Overstated } \\\hline\end{array}$$