Question 3 A. Accounting standards are prepared by regulators in order to assist both preparers and users of financial statements. Explain the advantages and disadvantages of compulsory accounting standards. (5 Marks) B. Calando plc operates a perpetual inventory system. The following transactions relate to one line of goods for resale during the period from 1st January to 31st March 20X0. Units Price per unit Opening stock 1" January 1,000 5.00 Purchases 10 January 3,750 6.30 25 January 2,500 6.50 15th March 1,500 13.00 Sales 5th February 4,500 20.00 31" March 2,600 21.00 REQUIRED: 1. Calculate the gross profit for the three months to 31st March 2010 using the first-in, first-out (FIFO) method. (7 Marks) 2. Calculate the gross profit for the three months to 31st March 2010 using the last-in, first out (LIFO) method. (7 Marks) 3. Show how your answer to i. would differ if 50% of the goods purchased on 15th March were damaged and had a net realizable value of 7.00 per unit. (6Marks)