Read the following passage and answer the item that follows. Your answer to this item should be based on the passage only.

A small trader who keeps no formal books is not being careless. Keeping them takes time that the business cannot spare, the software on offer is built for firms several sizes larger, and the immediate reward is a tax liability that informality avoided. The result is a firm that cannot show a lender what it earns, and so borrows at rates that assume the worst. What has worked elsewhere is not exhortation but arrangements that reduce the cost of being visible: recording that takes minutes rather than hours, tools shaped for a shop rather than a factory, and a first year in which becoming formal does not immediately cost more than it returns.

Regarding the formalisation of small firms, which of the following statements best reflect the solutions that are implied by the passage?

1. Record keeping needs to be quick enough to fit into the working day of a small firm.

2. The tools on offer have to be designed for firms of this size.

3. The early cost of becoming formal needs to be offset so that it does not exceed the benefit.

Select the correct answer using the code given below: