Year 2 Year 1 $0 352 $0 0 1,875 Green Caterpillar Garden Supplies Inc. Balance Sheet for Year Ending December 31 (Millions of Dollars) Year 2 Year 1 Assets Liabilities and equity Current assets: Current liabilities: Cash and equivalents $6,919 $5,535 Accounts payable Accounts receivable 2,531 2,025 Accruals Inventories 7,425 5,940 Notes payable Total current assets $16,875 $13,500 Total current liabilities Net fixed assets: Long-term debt Net plant and equipment $20,625 $16,500 Total debt Common equity: Common stock Retained earnings Total common equity Total assets $37,500 $30,000 Total liabilities and equity 1,992 $2,344 $1,875 7,031 $9,375 5,625 $7,500 18,281 9,844 $28,125 $37,500 14,625 7,875 $22,500 $30,000 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 accumulated owed financial obligations decreased from Year 1 to Year 2. This statement is because: Accruals actually increased from $0 in Year 1 to $352 million at the end of Year 2 JI LUTINOA stock outstanding-read each of the following statements, then identify the selection that best interprets tion conveyed by the balance sheet. Statement #1: Green Caterpillar's accumulated owed financial obligations decreased from Year 1 to Year 2. This statement is because: 1 Accruals actually increased from $0 in Year 1 to $352 million at the end of Year 2 O Notes payable actually increased from $1,992 million to $1,875 million between Years 1 and 2 The accounts payable account remained $0 for both Years 1 and 2 Statement #2: Over the past two years, Green Caterpillar Garden Supplies Inc. has relied more on the use of short-term debt than on long-term debt financing. This statement is because: Green Caterpillar's total current liabilities decreased by $469 million, while its long-term debt account decreased by $1,406 million Green Caterpillar's total notes payable increased by $117 million, while its common stock account increased by $3,656 million Green Caterpillar's total current liabilities increased by $469 million, while its use of long-term debt increased by $1,406 million Statement #3: The book value of one of Green Caterpillar's fixed assets is calculated as the original cost of Green Caterpillar's total current liabilities increased by $469 million, while its use of long-term debt increased by $1,406 million Statement #3: The book value of one of Green Caterpillar'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 adding its annual depreciation expense to its total historic and installation costs 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 Based on your understanding of the different items reported in the balance sheet and the information they provide, which statement regarding Green Caterpillar Garden Supplies Inc.'s balance sheet is consistent with US Generally Accepted Accounting Principles (GAAP)? The company's assets should be listed in alphabetical order. 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. ALO
