Unsure why this is the correct answer (Rising Historical Cost)

Currently working through the exam bank and came across this question. The answer is option D. But I am unsure why this is.

“In terms of rising prices, the use of historical cost accounting, tends to understate assets and overstate profit”

Is this the case because overtime, price is rising, but because the asset is historically accounted for, it hasn’t been updated and as such is based on a lower price, thus the asset is understated. But then I cant work out why the profit would be overstated, wouldn’t this also be understated if the asset is understated.

Thank you for the help 🙂