A company's correct ending balance for the inventory account at the end of $2024$ should be $$5,000,$ but the company incorrectly

stated it as $$3,000.$ In $2025,$ the company correctly recorded its ending balance of the inventory account. Which one of the

following is true?

Multiple Choice

Gross profit is overstated by $$2,000$ in $2024.$

Cost of goods sold is understated by $$2,000$ in $2024.$