Assume that the amount of ending inventory is overstated in Year 1. Further assume the overstatement in Year 1 is not discovered and the ending inventory in Year 2 is reported accurately. Under these circumstances,
A: cost of goods sold in Year 2 will be understated.
B: total assets in Year 2 will be understated.
C: the Year 2 ending balance in retained earnings will be accurate.
D: none of the answers are correct.