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 Assets Current assets Liabilities and equity Current liabilities: Cash and equivalents Accounts receivable Inventories $4,612 Accounts payable $0 293 1,660 $0 2,109 6,187 $14,062 Accruals 1,688 4,950 $11,250 Notes payable 1,562 $1,562 4,688 $6,250 Total current assets Total current liabilities Net fixed assets Long-term debt 5,859 Net plant and equipment $13,750 Total debt $7,812 Common equity: Common stock 12,188 6,562 $18,750 $25,000 15,235 Retained earnings Total common equity Total liabilities and equity $23,438 $31,250 Total assets $31,250 $25,000 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 net collection of inventory items increased by more than the firm sold between Years 1 and 2. This statement is because Total inventories of raw materials, work-in-process, and final goods increased from $4,950 million to $6,187 million between Year 1 and Year 2 The accounts receivable balance increased by $421 million between Years 1 and 2 O The accruals balance decreased by $293 million between Years 1 and 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: Green Caterpillar's Year 2 cash and equivalents balance is $14,512 cash or can be converted into cash almost immediately cash or can be converted into cash almost immediately O The funds recorded in Green Caterpillar's cash and equivalents account represents funds that are either O The funds recorded in Green Caterpillar's accounts receivable account represents funds that are either Statement #3: One way to interpret the change in Green Caterpillar'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 , because O The change from $4,950 million to $6,187 million reflects a net accumulation of new credit sales O The decrease from $2,109 million to $1,688 million implies a net decrease in accounts receivable and that more customers are paying off their receivables balances than are buying on credit The $421 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 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)? O 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. The company's debts are listed in the order in which they are to be repaid