In preparing its financial statements for the current year, a company’s closing inventory was understated by
$300,000.

What will be the effect of this error if it remains uncorrected?

A   The current year’s profit will be overstated and next year’s profit will be understated
B   The current year’s profit will be understated but there will be no effect on next year’s profit
C   The current year’s profit will be understated and next year’s profit will be overstated
D   The current year’s profit will be overstated but there will be no effect on next year’s profit.

C