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 companys financial condition and performance. Green Caterpillar Garden Supplies 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 sheets for Green Caterpillar Garden Supplies Inc. for the years ending December 31, Year 2 and 1, respectively. Green Caterpillar Garden Supplies Inc. Balance Sheet For the Year ended December 31 Year 2 Year 1 Year 2 Year 1 Assets Liabilities and equity Current assets: Current liabilities: Cash and equivalents $92,250 Accounts payable $0 $0 Accounts receivable $42,188 $33,750 Accruals $5,859 $0 Inventories $123,750 $99,000 Notes payable $33,203 $31,250 Total current assets $281,250 $225,000 Total current liabilities $31,250 Net fixed assets: Long-term debt $117,188 $93,750 Net plant and equipment $275,000 Total debt $156,250 $125,000 Common equity: Common stock $304,688 $243,750 Retained earnings $131,250 Total common equity $468,750 $375,000 Total assets $625,000 $500,000 Total liabilities and equity $625,000 $500,000 Given the information in the preceding balance sheetand assuming that Green Caterpillar Garden Supplies Inc. has 50 million shares of common stock outstandingread each of the following statements, then identify the selection that best interprets the information conveyed by the balance sheet. Statement #1: Green Caterpillars net collection of inventory items increased by more than the firm sold between Years 1 and 2. This statement is , because: The accounts receivable balance increased by $8,438 between Years 1 and 2. Total inventories of raw materials, work-in-process, and final goods increased from $99,000 to $123,750 between Year 1 and Year 2. Total inventories of raw materials, work-in-process, and final goods decreased by $24,750 between Year 1 and Year 2. The accruals balance decreased by $5,859 between Years 1 and 2. Statement #2: Over the past two years, Green Caterpillar Garden Supplies Inc. has relied more on the use of short-term debt than on long-term debt financing. This statement is , because: Green Caterpillars total notes payable increased by $1,953, while its common stock account increased by $60,938. Green Caterpillars total current liabilities increased by $7,812, while its use of long-term debt increased by $23,438. Green Caterpillars total current liabilities decreased by $7,812, while its long-term debt account decreased by $23,438. Statement #3: The book value of one of Green Caterpillars fixed assets is calculated as the original cost of the asset minus its annual depreciation expense. This statement is , because: An assets net book value is calculated by subtracting its annual depreciation expense from its total historic and installation costs. An assets net book value is calculated by subtracting its accumulated depreciation expense from its total historic and installation costs. An assets 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 on the balance sheet and the information they provide, which statement regarding Green Caterpillar Garden Supplies Inc.s balance sheet is consistent with U.S. Generally Accepted Accounting Principles (GAAP)? The companys debts are listed in the order in which they are to be repaid. The companys debts should be listed in order of their liquidity. The companys debts should be listed from those carrying the largest balance to those with the smallest balance.