Tho 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 financlal condition and performance. Cold Goose Metal Works inc. is a thypothetical 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 incompiete. Use the jnformation given to complete the balance sheet. Gven the information in the preceding balance sheet-and assuming that Cold Goofe Metal Works the. has 50 mitlon shares of cammen stock outstandirg - read each of the following statements, then identify the selection that best interprets the intormation conveyed by the bolance sheec. Statement \#1: Cold Goose's net collection of inventory items increased by more than the firm's sales between Years 1 and 2. This statement is because: The accruals balance decreased by $117 million between Years 1 and 2 Total inventories of raw materials, work-in-process, and final goods decreased by $495 million between Year 1 and Year 2 Total inventories of raw materials, work-in-process, and final goods increased from $1,980 million to $2,475 million between Year 1 and Year 2 Statement 2 : in Year 2, Cold Goose Metal Works inc, was profitable. This statement is because: Cold Goose's total assets increased between Years 1 and 2 The cash and equivalents account increased between Years 1 and 2 Cold Goose's retained eamings account increased between the end of Years 1 and 2 Statement "3: One way to interpret the change in Cold Goose's accounts receivable balance from Year 1 to Year 2 is that more customers purchosed new items on credit rather than paying off exating credit accounts. Statement \#3: One way to interpret the change in Cold Goose's accounts recelvable 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 $169 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 The change from $1,980 million to $2,475 million reflects a net accumulation of new credit sales The decrease from $844 million to $675 million implies a net decrease in accounts receivable and that more customers are paying off their receivables balances than are buying on credit Based on your understanding of the different items reported in the balance sheet and the information they provide, which statement regarding Cold Goose Metal Works theis balance sheet is consistent with U.S. Generally Accepted Accounting Principles (GAAP)? The company's assets should be listed from those carrying the largest balance to those with the smallest balance. The company's assets should be listed in the order in which they are to be converted into cash. The company's assets shoula be isted in alphabetical order
