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All options are either correct or incorrect statments The balance sheet provides a srapshot of the financial condition of a company. Investors and analysts use
All options are either correct or incorrect statments
The balance sheet provides a srapshot 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, Fuzzy Button Clothing Company 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. Given the information in the preceding balance sheet-and assuming that Fuzy Button Clothing Company has 50 million shares of common stock outstanding - read each of the following statements, then identify the selection that best interprets the information conveved by the balance sheet. Statement a 1: Fuzry Button's net collection of inventofy items increased by more than the firm sold between Years 1 and 2. This statement is because: The accruals balance decreased by $410 milion between Years 1 and 2 . Total inventories of raw materials, work-in-process, and final goods increased from $6,930 million to $8,662 million between Year 1 and Year 2. Total inventories of raw materials, work-in-process, and final goods decreased by $1,732 million between Year 1 and Year 2 . Statement 2 : On December 31 of Year 2 , Fuzzy Button Clothing Company had $8,072 million of actual money that it could bave spent immediateiy. Thils statement is - because: The funds recorded in Furay Button's cash and equlvalents account represents funds that are elther cash or can be convertedinto-cash almost immediately. Furrr Button's Year 2 cash and equlvalents balance is $20,317, The funds recorded in Fuzzy Button's accounts receivable account represents funds that are either cish or cao be converted irtu carh almost immediately. Statement =as if fuzzy Button ever goes bankrupt, its common shareholders will be paid off first, then its debthoiders and areferred stochatiolefers. This statement is because: Statement 3 : If Fuzzy Button ever goes banknupt, its common shareholders will be paid off first, then its debtholders and preferred stockholders. This statement is because: Common shareholders are treated as residual investors. Debtholders and preferred shareholders are considered residual investors. Debtholders are treated as residual investors. Based on your understanding of the different items reported on the balance sheet and the information they provide, which statement regarding Fuzy Button Clothing Company's balance sheet is consistent with U.S. Generally Accepted Accounting Principles (GAAP)? The company's debts are listed in the order in which they are to be repaid. The company's debts should be listed from those carrying the largest balance to those with the smallest balance. The company's debts should be listed in order of their liquidity Step by Step Solution
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