In January, X Company, a merchandiser, purchased inventory on account. The accountant incorrectly recorded the transaction as an increase in Inventories and a decrease in Retained Earnings. As a result, which of the following is true regarding the January financial statements? Accounts Receivable was overstated. Revenue was understated. Accounts Payable was overstated. Retained Earnings was overstated. Inventories were understated. Profit was understated.