Mikey Uses a Periodic Inventory System and Committed an Error

Multiple Choice

Mikey uses a periodic inventory system and committed an error that understated inventory at the end of Year One.If no further errors occur,at the end of Year Two:

A) Profit is overstated; equity is overstated
B) Profit is overstated; equity is correct
C) Profit is understated; equity is understated
D) Profit is understated; equity is overstated