Statement #1: Blue Hamsters pool of relatively liquid assets, which are available to support the companys current and future sales, decreased from Year 1 to Year 2.

This statement is (TRUE OR FALSE) , because:

A. Blue Hamsters total current liabilities balance decreased by $22,500 between Year 1 and Year 2.

B. Blue Hamsters total current asset balance actually increased from $90,000 to $112,500 between Year 1 and Year 2.

C. Blue Hamsters total current asset balance decreased from $112,500 to $90,000 between Year 1 and Year 2.

D. Blue Hamsters total current liabilities balance increased from $13,500 to $16,875 between Year 1 and Year 2.

Statement #2: On December 31 of Year 2, Blue Hamster Manufacturing Inc. had $46,125 of actual money that it could have spent immediately.

This statement is (TRUE OR FALSE) , because:

A. Blue Hamsters Year 2 cash and equivalents balance is $116,100.

B. The funds recorded in Blue Hamsters accounts receivable account represents funds that are either cash or can be converted into cash almost immediately.

C. The funds recorded in Blue Hamsters cash and equivalents account represents funds that are either cash or can be converted into cash almost immediately.

Statement #3: If Blue Hamster ever goes bankrupt, its common stockholders will be paid off first, then its debtholders and preferred stockholders.

This statement is (TRUE OR FALSE) , because:

A. Common shareholders are treated as residual investors

B. Debtholders are treated as residual investors

C. Debtholders and preferred shareholders are considered residual investors

Based on your understanding of the different items reported on the balance sheet and the information they provide, which statement regarding Blue Hamster Manufacturing Inc.s balance sheet is consistent with U.S. Generally Accepted Accounting Principles (GAAP)?

A. The companys debts should be listed in order of their liquidity.

B. The companys debts are listed in the order in which they are to be repaid.

C. The companys debts should be listed from those carrying the largest balance to those with the smallest balance.

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 Blue Hamster Manufacturing 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 Blue Hamster Manufacturing Inc. for the years ending December 31, Year 2 and 1, respectively Blue Hamster Manufacturing Inc. Balance Sheet For the Year ended December 31 Year 2 Year 1 Year 2 Year 1 Assets Current assets: Cash and equivalents Accounts receivable Inventories Total current assets Net fixed assets: Net plant and equipment Liabilities and equity Current liabilities: $36,900 Accounts payable $13,500 Accruals $39,600 Notes payable $90,000 Total current liabilities $0 $2,344 $13,281 $0 $0 $12,500 $12,500 $37,500 $50,000 $16,875 $49,500 $112,500 $46,875 $62,500 Long-term debt $110,000 Total debt Common equity: Common stock Retained earnings Total common equity Total liabilities and equity $97,500 $52,500 $150,000 $200,000 $121,875 $187,500 $250,000 Total assets $250,000 $200,000 Given the information in the preceding balance sheet-and assuming that Blue Hamster Manufacturing 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