Answer Happy

Question 3 Consider the following statements. For each one state whether the statement is true or false and provide a brief explanation to support your answer. a) IAS 2 allows measurement of inventories using FIFO or LIFO. [5 marks] b) In an inflationary environment FIFO, LIFO and average cost will all yield the same value for cost of goods sold. [5 marks] c) Possible liabilities are recognised on the balance sheet, following the prudence principle. [5 marks] d) If a company believes that one of its customers cannot pay its debt, then it should take a provision for the amount owed. [5 marks] e) In double-entry bookkeeping, when a business settles its debt toward a supplier it should credit the cash account and debit the trade payables account. [5 marks]