Answer the following question:

A company uses the periodic inventory system and the FIFO inventory costing method. If beginning inventory is understated (too low) by $23,000, then the effect of this error in the current period is:

a) Cost of goods sold would be overstated and net earnings would be understated.

b) The error in cost of goods sold and net earnings is not determinable given the information provided.

c) Cost of goods sold would be understated and net earnings would be understated.

d) Cost of goods sold would be understated and net earnings would be overstated.

e) Cost of goods sold would be overstated and net earnings would be overstated.