Final answer:
Keeping two sets of books is commonly associated with fraud or financial manipulation and is generally considered illegal and unethical. However, there might be instances where different accounting treatments for the same transactions can be legitimate, but only if they comply with all legal and ethical standards.
Step-by-step explanation:
When considering the statement keeping two sets of books, it is important to examine the ethical and legal implications of this action. Keeping two sets of financial records can imply different things depending on the context. However, commonly it is referenced in a manner that implies potential wrongdoing or financial manipulation.
Choice (a), stating that keeping two sets of books is legal, is generally false. The practice is often associated with fraudulent activity, such as tax evasion or misleading shareholders and regulators. This is legally impermissible in most jurisdictions and can lead to criminal charges.
Choice (b), suggesting that keeping two sets of books is ethical, is also typically inaccurate. Ethical business practices demand transparency and honesty, whereas maintaining separate sets of books often signifies an intent to deceive and is therefore unethical.
Choice (c) indicates that keeping two sets of books means the same transactions will be included in both but may be accounted for differently. This can sometimes occur for legitimate purposes, such as internal management accounting vs. external financial reporting. However, even if the transactions are recorded, the reasoning and circumstances for why they are accounted for differently must align entirely with legal and ethical standards. If these standards are not satisfied, choice (c) could also represent inappropriate behavior.
In conclusion, the most appropriate answer is that maintaining consistency and accuracy in financial records is a pivotal business requirement, and any deviation from this standard—such as keeping two sets of books in a dishonest manner—is neither legal nor ethical.