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.

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 sheet.

Blue Hamster Manufacturing Inc. Balance Sheet for Year Ending December 31 (Millions of Dollars)
	Year 2	Year 1		Year 2	Year 1
Assets			Liabilities and equity
Current assets:			Current liabilities:
Cash and equivalents		$4,612	Accounts payable	$0	$0
Accounts receivable	2,109	1,688	Accruals	293	0
Inventories	6,187	4,950	Notes payable	1,660	1,562
Total current assets	$14,062	$11,250	Total current liabilities		$1,562
Net fixed assets:			Long-term debt	5,859	4,688
Net plant and equipment		$13,750	Total debt	$7,812	$6,250
			Common equity:
			Common stock	15,235	12,188
			Retained earnings		6,562
			Total common equity	$23,438	$18,750
Total assets	$31,250	$25,000	Total liabilities and equity	$31,250	$25,000

Given the information in the preceding balance sheetand assuming that Blue Hamster Manufacturing 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: 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 , because:

Blue Hamsters total current liabilities balance increased from $1,688 million to $2,109 million between Year 1 and Year 2

Blue Hamsters total current liabilities balance decreased by $2,812 million between Year 1 and Year 2

Blue Hamsters total current asset balance actually increased from $11,250 million to $14,062 million between Year 1 and Year 2

Statement #2: On December 31 of Year 2, Blue Hamster Manufacturing Inc. had $5,766 million of actual money that it could have spent immediately.

This statement is , because:

Blue Hamsters Year 2 cash and equivalents balance is $14,512

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

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

Statement #3: The book value of one of Blue Hamsters 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 adding its annual depreciation expense to its total historic and installation costs

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

Based on your understanding of the different items reported in 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)?

The companys assets should be listed in the order in which they are to be converted into cash.

The companys assets should be listed in alphabetical order.

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