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 existing credit accounts. This statement is incorrect v , because: O 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. The change from $2,970 million to $3,712 million reflects a net accumulation of new credit sales. The $253 million 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.

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 existing ctedit accounts. This staternent 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 batances than are buring on credit. The change from $2,970 million to $3,712 mis on reflects a net accumulation of new credit sales. The $253 milion increase in accoubts receivable means either that Year 1 's existing credit customers are not paying off their owed balances and new or existing custemers are making additional purchases on crodit, or that Year 1 's credat customers have repaid their owed balances and Year 2 credit sales have exceeded Year I's credit sales