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. 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. Fuzzy Button Clothing Company Balance Sheet for Year Ending December 31 (Millions of Dollars) Year 2 Year 2 Year 1 Assets Current assets: Liabilities and equity Current liabilities: Cash and equivalents Accounts receivable $5,766$4,612Accounts payable s0 2.109 1,688 Accruals 4,950Notes payable 293 1,660 1,562 $1,562 4,688 $7,812$6,250 Total current assets $14,062 $11,250 Total current liabilities $1,953 Net fixed assets: 5,859 Common equity 15,235 8,203 438 $31,250 12,188 6,562 $18,750 $25,000 Retained eamings Total common equity 31.250 $25,000 Total iabilities and equity common stock outstanding-read each of the following statements, then identify the selection that best interprets the information conveyed by the balance sheet. owed finandial obligations decreased from Year 1 to Year 2 O The accounts payable account remained $0 for both Years 1 and 2 O Notes payable actually increased from $1,660 million to $1,562 million between Years 1 and 2 O Accruats actually increased from $0 in Year 1 to $293 million at the end of Year 2 Statement 2: On December 31 of Year 2, Fuzzy Button Clothing Company had $5,766 milion of actual money that it could have spent immediately because: belance is $14,512 O The funds recorded in Fuzzy Button's accounts receivable account represents funds that are either cash or can be converted into cash almost immediately O The funds or can be converted into cash almost immediately shares of c shares ofc outstanding shares of c Based on your understanding of the different items reported on the balance sheet and the information they provide, which statement regarding Fuzzy Button Clothing Company's balance sheet is consistent with U.S. Generally Accepted Accounting Principles (GAAP)? O The company's debts should be listed in order of their liquidity O The company's debts are listed in the order in which they are to be repeid O The company's debts should be listed from those carrying the largest balance to those with the smallest balance
