Aaron Company uses the periodic inventory cost flow method. If Aaron's ending inventory is understated due to an accounting error, what is the effect on net income and the ending balance of retained earnings? Net IncomeRetained EarningsA.UnderstatedUnderstatedB.UnderstatedOverstatedC.OverstatedUnderstatedD.OverstatedOverstated
A. Option A
B. Option B
C. Option C
D. Option D
Answer: A
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