Given the information in the preceding balance sheet-and assuming that Green Caterpillar Garden Supplies 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: Green Caterpillar's accumulated owed financial obligations decreased from Year 1 to Year 2 This statement is , because Notes payable actually increased from $1,660 million to $1,562 million between Years 1 and 2 Long-term debt decreased from $1,660 million at the end of Year 1 to $1,562 million by the end of Year 2 Accruals actually increased from $0 in Year 1 to $293 million at the end of Year 2 Statement #2: On December 31 of Year 2, Green Caterpillar Garden Supplies Inc. had $5,766 million of actual money that it could have spent immediately This statement is because O The funds recorded in Green Caterpillar's cash and equivalents account represents funds that are either cash or can be converted into cash almost immediately O Green Caterpillar's Year 2 cash and equivalents balance is $14,512 The funds recorded in Green Caterpillar's accounts receivable account represents funds that are either cash or can be converted into cash almost immediately Statement #3: If Green Caterpillar ever goes bankrupt, its common stockholders will be paid off first, then its debtholders and preferred stockholders This statement is because Debtholders and preferred shareholders are considered residual investors Debtholders are treated as residual investors Common shareholders 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 Green Caterpillar Garden Supplies Inc.'s balance sheet is consistent with U.S. Generally Accepted Accounting Principles (GAAP)? The company's debts should be listed in order of their liquidity The company's debts should be listed from those carrying the largest balance to those with the smallest balance O The company's debts are listed in the order in which they are to be repaid 2. Balance sheet Aa Aa 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 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 sheet. Green Caterpillar Garden Supplies Inc. Balance Sheet for Year Ending December 31 (Millions of Dollars) Year 2 Year 1 Year 2 Year 1 Liabilities and equity Assets Current liabilities: Current assets: Cash and equivalents5,766 4,612 Accou $0 $0 Accruals 293 Accounts receivable 2,109 1,688 0 4,950 Notes payable Inventories 6,187 1,660 1,562 Total current assets Total current liabilities $11,250 $1,562 $14,062 Net fixed assets: Long-term debt 5,859 4,688 Net plant and equipment$17,188 $13,750 Total debt $7,812 $6,250 Common equity: Common stock 15,235 12,188 Retained earnings 6,562 8,203 Total common equity $23,438 $18,750 Total assets Total liabilities and equity $31,250 $25,000 $31,250 $25,000
