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. Fuzzy Button Clothing 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 sheets for Fuzzy Button Clothing Company for the years ending December 31, Year 2 and 1, respectively, Fuzzy Button Clothing Company Balance Sheet For the Year ended December 31 Year 2 Year 2 Year 1 30 30 Assets Current assets: Cash and equivalents Accounts receivable Inventories Total current assets Net foxed assets: Net plant and equipment 30 $42,188 $123,750 $281,250 $5,859 $33,203 Year 1 Liabilities and equity Current abilities: $92,250 Accounts payable $33,750 Accruals $99,000 Notes payable $225,000 Total current liabilities Long-term debt $275,000 Total debt Common equity Common stock Retained earings Total common equity $500,000 Total liabilities and equity $31,250 $31,250 $93,750 $125,000 $117,188 $156,250 $304,688 $243,750 $131,250 $375,000 $500,000 Total assets 5625,000 $468,750 $625,000 Given the information in the preceding balance sheet-and assuming that Furry Button Clothing Company 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: Fuzzy Button'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 $99,000 to $123,750 between Year 1 and Year 2. The accounts receivable balance increased by $8,438 between Years 1 and 2. Total Inventories of raw materials, work-in-process, and final goods decreased by $24,750 between Year 1 and Year 2 The accruals balance decreased by $5,859 between Years 1 and 2 Statement #2: Over the past two years, Furry Button Clothing Company has relied more on the use of short-term debt than on long term debt financing This statement is because Furry Button's total current liabilities decreased by 57,812, while its long-term debt account decreased by $23,438 Fuzzy Button's total notes payable increased by $1.953, while its common stock account increased by 560,938 Fuzzy Button's total current liabilities increased by $7.812, while its use of long-term debt increased by $23,438 Statement #3: The book value of one of Fuzzy Button's fixed assets is calculated as the original cost of the asset minus its annual depreciation expense This statement is because: An asset's net book value is calculated by subtracting its annual depreciation expense from its total historic and installation costs. An asset's net book value is calculated by subtracting its accumulated depreciation expense from its total historic and installation costs. An asset's net book value is calculated by adding its annual depreciation expense to its total historic and installation costs. Based on your understanding of the different items reported on the balance sheet and the information they provide, which statement regarding Fuzzy Button Clothing 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