Cute Camel Woodcraft Company

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 $$115,312$ $$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 $$39,062$ $$31,250$

Net fixed assets: Long$-$term debt $$117,188$ $$93,750$

Net plant and equipment $$343,750$ $$275,000$ Total debt $$156,250$ $$125,000$

Common equity:

Common stock $$304,688$ $$243,750$

Retained earnings $$164,062$ $$131,250$

Total common equity $$468,750$ $$375,000$

Total assets $$625,000$ $$500,000$ Total liabilities and equity $$625,000$ $$500,000$

Statement #$1$: Cute Camel$$s accumulated owed financial obligations decreased from Year $1$ to Year $2.$

This statement is TRUE OR FALSE? because:

A$.$ Accruals actually increased from $$0$ in Year $1$ to $$5,859$ at the end of Year

B$.$ Notes payable actually increased from $$33,203$ to $$31,250$ between Years $1$ and $2.$

C$.$ Long$-$term debt decreased from $$33,203$ at the end of Year $1$ to $$31,250$ by the end of Year $2.$

D$.$ The accounts payable account remained $$0$ for both Years $1$ and $2.$

Statement #$2$: In Year $2,$ Cute Camel Woodcraft Company was profitable.

This statement is TRUE OR FALSE? $,$ because:

A$.$ Cute Camel$$s total assets increased between Years $1$ and $2.$

B$.$ Cute Camel$$s retained earnings account increased between the end of Years $1$ and $2.$

C$.$ The cash and equivalents account increased between Years $1$ and $2.$

Statement #$3$: One way to interpret the change in Cute Camel$$s accounts receivable balance from Year $1$ to Year $2$ is that more customers purchased new items on credit rather than paying off existing credit accounts.

This statement is TRUE OR FALSE? $,$ because:

A$.$ The change from $$99,000$ to $$123,750$ reflects a net accumulation of new credit sales.

B$.$ The decrease from $$42,188$ to $$33,750$ implies a net decrease in accounts receivable and that more customers are paying off their receivables balances than are buying on credit.

C$.$ The $$8,438$ increase in accounts receivable means either that Year $1$s existing credit customers are not paying off their owed balances and new or existing customers are making additional purchases on credit, or that Year $1$s credit customers have repaid their owed balances and Year $2$ credit sales have exceeded Year $1$s credit sales.

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

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

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

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