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 (Millions of dollars) Year 2 Year 1 Year 2 Year 1 Assets Liabilities and equity Current assets: Current liabilities: Cash and equivalents $2,767 Accounts payable $0 $0 Accounts receivable 1,266 1,013 Accruals 176 0 Inventories 3,712 2.970 Notes payable 996 937 Total current assets $8,437 $6,750 Total current liabilities $937 Net fixed assets: Long-term debt 3,515 2,813 Net plant and equipment $8,250 Total debt $4,687 $3,750 Common equity: Common stock 9,141 7,313 Retained earnings 3.937 Total common equity $14,063 $11,250 Total assets $18,750 $15,000 Total liabilities and equity $18,750 $15,000 Given the information in the preceding balance sheet-and assuming that Cute Camel Woodcraft 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: Cute Camel's net collection of inventory items increased by more than the firm's sales between Years 1 and 2. This statement is because: Statement #1: Cute Camel's net collection of inventory items increased by more than the firm's sales between Years 1 and 2. This statement is because: O The accruals balance decreased by $176 million between Years 1 and 2 Total inventories of raw materials, work-in-process, and final goods decreased by $742 million between Year 1 and Year 2 Total inventories of raw materials, work-in-process, and final goods increased from $2,970 million to $3,712 million between Year 1 and Year 2 Statement #2: In Year 2, Cute Camel Woodcraft Company was profitable. This statement is because: O The cash and equivalents account increased between Years 1 and 2 O Cute Camel's retained earnings account increased between the end of Years 1 and 2 O Cute Camel's total assets increased between Years 1 and 2 Statement #3: One way to interpret the change in Cute Camel'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: The decrease from $1,266 million to $1,013 million implies a net decrease in accounts receivable and that more customers are paying off their receivables balances than are buying on credit Statement #3: One way to interpret the change in Cute Camel'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: The decrease from $1,266 million to $1,013 million implies a net decrease in accounts receivable and that more customers are paying of their receivables balances than are buying on credit The $253 increase in accounts receivable means either that Year 15 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 The change from $2,970 million to $3,712 million reflects a net accumulation of new credit sales Based 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 are listed in the order in which they are to be repaid. The company's debts should be listed in order of their liquidity