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