The 2016 ending inventory was overstated by $863. Which of the following describes the effect of the inventory error on the 2016 financial statements?

A. Current assets were overstated and net income was overstated.

B. Current assets were understated and net income was overstated.

C. Current assets were understated and net income was understated.

D. Current assets were overstated and net income was understated.