Consider the following statements about the accounting treatment of foreign exchange transactions:

1. Monetary items denominated in foreign currencies are translated at the exchange rates prevailing on the balance sheet date.

2. Non-monetary items carried at historical cost are translated using the exchange rates at the date of the transaction.

3. Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were initially recorded are recognized in profit or loss.

Which of the above statements is/are correct?