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? - Inventories were understated. - Retained Earnings was understated. -Revenue was understated. - Expenses were understated. - Accounts Receivable was overstated. - Accounts Payable was understated.