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