$2.$ Balance sheet

The balance sheet provides a snapshot of the financial condition of a company. Investors and analysts use the information given on the balance sheet and other financial statements to make several interpretations regarding the company$$s financial condition and performance.

Blue Hamster Manufacturing Inc. is a hypothetical company. Suppose it has the following balance sheet items reported at the end of its first year of operation. For the second year, some parts are still incomplete. Use the information given to complete the balance sheet.

Blue Hamster Manufacturing Inc. Balance Sheet for Year Ending December $31($Millions of Dollars$)$

Year $2$ Year $1$ Year $2$ Year $1$

Assets Liabilities and equity

Current assets: Current liabilities:

Cash and equivalents $$4,612$ Accounts payable $$0$ $$0$

Accounts receivable $2,1091,688$ Accruals $2930$

Inventories $6,1874,950$ Notes payable $1,6601,562$

Total current assets $$14,062$ $$11,250$ Total current liabilities $$1,562$

Net fixed assets: Long$-$term debt $5,8594,688$

Net plant and equipment $$13,750$ Total debt $$7,812$ $$6,250$

Common equity:

Common stock $15,23512,188$

Retained earnings $6,562$

Total common equity $$23,438$ $$18,750$

Total assets $$31,250$ $$25,000$ Total liabilities and equity $$31,250$ $$25,000$

Given the information in the preceding balance sheet$$and assuming that Blue Hamster Manufacturing Inc. has $50$ million shares of common stock outstanding$$read each of the following statements, then identify the selection that best interprets the information conveyed by the balance sheet.

Statement #$1$: Blue Hamster$$s pool of relatively liquid assets, which are available to support the company$$s current and future sales, decreased from Year $1$ to Year $2.$

This statement is $,$ because:

Blue Hamster$$s total current liabilities balance decreased by $$2,812$ million between Year $1$ and Year $2$

Blue Hamster$$s total current liabilities balance increased from $$1,688$ million to $$2,109$ million between Year $1$ and Year $2$

Blue Hamster$$s total current asset balance actually increased from $$11,250$ million to $$14,062$ million between Year $1$ and Year $2$

Statement #$2$: On December $31$ of Year $2,$ Blue Hamster Manufacturing Inc. had $$5,766$ million of actual money that it could have spent immediately.

This statement is $,$ because:

Blue Hamster$$s Year $2$ cash and equivalents balance is $$14,512$

The funds recorded in Blue Hamster$$s cash and equivalents account represents funds that are either cash or can be converted into cash almost immediately

The funds recorded in Blue Hamster$$s accounts receivable account represents funds that are either cash or can be converted into cash almost immediately

Statement #$3$: The book value of one of Blue Hamster$$s fixed assets is calculated as the original cost of the asset minus its annual depreciation expense.

This statement is $,$ because:

An asset$$s net book value is calculated by subtracting its annual depreciation expense from its total historic and installation costs

An asset$$s net book value is calculated by subtracting its accumulated depreciation expense from its total historic and installation costs

An asset$$s net book value is calculated by adding its annual depreciation expense to its total historic and installation costs

Based on your understanding of the different items reported in the balance sheet and the information they provide, which statement regarding Blue Hamster Manufacturing Inc.$$s balance sheet is consistent with U$.$S$.$ Generally Accepted Accounting Principles $($GAAP$)?$

The company$$s assets should be listed in the order in which they are to be converted into cash.

The company$$s assets should be listed in alphabetical order.

The company$$s assets should be listed from those carrying the largest balance to those with the smallest balance.