If the inventory shrinkage at the end of the year is overstated by $7,500, the error will cause an:

A. understatement of cost of merchandise sold for the year by $7,500.

B. overstatement of gross profit for the year by $7,500.

C. overstatement of merchandise inventory for the year by $7,500.

D. understatement of net income for the year by $7,500.AppendixLO1