At the end of 20X1, a $2,500 understatement was discovered in the amount of the 20X1 ending inventory as reflected in the perpetual inventory records. What were the 20X1 effects

At the end of 20X1, a $2,500 understatement was discovered in the amount of the 20X1 ending inventory as reflected in the perpetual inventory records. What were the 20X1 effects of the $2,500 inventory error (before correction)?
A) Assets (inventory) were understated by $2,500 and pretax profit was understated by $2,500.
B) Assets (inventory) were understated by $2,500 and pretax profit was overstated by $2,500.
C) Cost of goods sold was understated by $2,500 and pretax profit was understated by $2,500.
D) Cost of goods sold was overstated by $2,500 and pretax profit was overstated by $2,500.


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