2. Balance sheet Aa Aa 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 2 Year 1 Year 1 Liabilities and equity Assets Current liabilities: Current assets: Cash and equivalents $7,380 Accounts payable $0 $0 Accounts receivable 3,375 2,700 Accruals 469 0 Notes payable 2,656 Inventories 9,900 7,920 2,500 Total current assets $22,500 $18,000 Total current liabilities $2,500 Net fixed assets: 9,375 Long-term debt 7,500 Net plant and equipment $22,000 Total debt $12,500 $10,000 Common equity: Common stock 24,375 19,500 Retained earnings 10,500 Total common equity $37,500 $30,000 Total liabilities and equity Total assets $50,000 $40,000 $50,000 $40,000 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 int 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: Notes payable actually increased from $2,656 million to $2,500 million between Years 1 and 2 Accruals actually increased from $0 in Year 1 to $469 million at the end of Year 2 The accounts payable account remained $0 for both Years 1 and 2 Statement #2 : On December 31 of Year 2, Green Caterpillar Garden Supplies Inc. had $9,225 million of actual money that it could have spent immediately. This statement is because: O The funds recorded in Green Caterpillar's cash and equivalents account represents funds that are either cash or can be converted into cash almost immediately Green Caterpillar's Year 2 cash and equivalents balance is $23,220 The funds recorded in Green Caterpillar's accounts receivable account represents funds that are either cash or can be converted into cash almost immediately 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 ng credit accounts. This statement is because: The decrease from $3,375 million to $2,700 million implies a net decrease in accounts receivable and that more customers are paying off their receivables balances than are buying on credit The change from $7,920 million to $9,900 million reflects a net accumulation of new credit sales The $675 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 in 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)? 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 should be listed in alphabetical order