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. Cute Camel Woodcraft Company 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. Cute Camel Woodcraft Company Balance Sheet for Year Ending December 31 Given the information in the preceding balance sheek-and assuming that Cute Camel Woodcraft Company has 50 milion 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: Cute Camel's accumulated owed financial obligations decreased from Year 1 to Year 2 . This statement is , because: The accounts payable account remained $0 for both Years 1 and 2 . Notes payable actually Increased from $2,324 million to $2,187 million between Years 1 and 2 . Accruals actually increased from $0 in Year 1 to $410 million at the end of Year 2 . Statement \#2: Over the past two years, Cute Camel Woodcraft Company has relied more on the use of short-term debt than on long-term debt financing. This statement is because: Cute Camel's total current liabilities decreased by $547 milion, while its long-term debt account decreased by $1,640 million. Cute Camel's total notes payable increased by $137malion, while its common stock account increased by $4,265 milion. Cute Camel's total current liabilities increased by $547 million, while its use of long-term debt increased by $1,640 million. Statement =3 : if Cute Camel ever goes bankrupt, its common shareholders will be paid off first, then its debtholders and preferred stockholders. This statement is because: Debtholders and preferred shareholders are considered residual investors. Common shareholders are treated as residual investors. Debtholders are treated as residual investors. Eiosed on your understanding of the different items reported on 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)? The company's debts should be listed from those carrying the largest balance to those with the smallest balance. The company's debts should be listed in order of their liquidity. The company's debts are listed in the order in which they are to be repaid
