Axle Motors Inc.has a December 31 year-end.On November 28,20X2,the company sold inventory for $600 on account with the terms 2/10,n/30.On February 28,20X3,the company recognized the account as uncollectible.If Axle Motors Inc.uses the specific write-off method,what can be said with respect to the matching principle?
A) The matching principle is not violated using the specific write-off method.
B) 20X2 earnings are overstated by $600,and 20X3 earnings are understated by $600.
C) 20X2 earnings are understated by $600,and 20X3 earnings are overstated by $600.
D) 20X2 earnings are overstated by $600,and 20X3 earnings are overstated by $600.
E) 20X2 earnings are understated by $600,and 20X3 earnings are understated by $600.
Correct Answer:
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