Ending Inventory for the Current Accounting Period Is Understated by $2,700

Ending inventory for the current accounting period is understated by $2,700. What effect will this error have on cost of goods sold and net income?

A)
$$\begin{array} { | l | l | } \hline \text { Cost of Goods Sold } & \text { Net Income } \\\hline \text { Understated } & \text { Understated } \\\hline\end{array}$$
B)
$$\begin{array} { | l | l | } \hline \text { Cost of Goods Sold } & \text { Net Income } \\\hline \text { Overstated } & \text { Overstated } \\\hline\end{array}$$
C)
$$\begin{array} { | l | l | } \hline \text { Cost of Goods Sold } & \text { Net Income } \\\hline \text { Understated } & \text { Overstated } \\\hline\end{array}$$
D)
$$\begin{array} { | l | l | } \hline \text { Cost of Goods Sold } & \text { Net Income } \\\hline \text { Overstated } & \text { Understated } \\\hline\end{array}$$