his statement is O The accruals balance decreased by $352 million between Years 1 and 2 Total inventories of raw materials, work-in-process, and final goods increased from $5,940 million to $7,425 million between Year 1 an Year 2 Total inventories of raw materials, work-in-process, and final goods decreased by $1,485 million between Year 1 and Year 2 , because: Statement #2: Over the past two years, Cute Camel Woodcraft Company has relied more on the use of short-term debt than on long- term debt financing. his statement is , because: O Cute Camel's total notes payable increased by $117 million, while its common stock account increased by $3,656 million O Cute Camel's total current liabilities decreased by $469 million, while its long-term debt account decreased by $1,406 million Cute Camel's total current liabilities increased by $469 million, while its use of long-term debt increased by $1,406 million his statement is Statement #3: The book value per share of Cute Camel's stock in Year 2 was $562.50. because: O The per-share book value is calculated by dividing the company's total debt by the number of outstanding shares of common stock The per-share book value is calculated by dividing the company's total assets by the number of outstanding shares of common stock The per-share book value is calculated by dividing the company's total common equity by the number of outstanding shares of commo stock ased on your understanding of the different items reported on the balance sheet and the information they provide, which statement regarding amel Woodcraft Company's balance sheet is consistent with U.S. Generally Accepted Accounting Principles (GAAP)? O The company's debts should be listed in order of their liquidity.
his statement is O The accruals balance decreased by $352 million between Years 1 and 2 Total inventories of raw materials, work-in-process, and final goods increased from $5,940 million to $7,425 million between Year 1 an Year 2 Total inventories of raw materials, work-in-process, and final goods decreased by $1,485 million between Year 1 and Year 2 , because: Statement #2: Over the past two years, Cute Camel Woodcraft Company has relied more on the use of short-term debt than on long- term debt financing. his statement is , because: O Cute Camel's total notes payable increased by $117 million, while its common stock account increased by $3,656 million O Cute Camel's total current liabilities decreased by $469 million, while its long-term debt account decreased by $1,406 million Cute Camel's total current liabilities increased by $469 million, while its use of long-term debt increased by $1,406 million his statement is Statement #3: The book value per share of Cute Camel's stock in Year 2 was $562.50. because: O The per-share book value is calculated by dividing the company's total debt by the number of outstanding shares of common stock The per-share book value is calculated by dividing the company's total assets by the number of outstanding shares of common stock The per-share book value is calculated by dividing the company's total common equity by the number of outstanding shares of commo stock ased on your understanding of the different items reported on the balance sheet and the information they provide, which statement regarding amel Woodcraft Company's balance sheet is consistent with U.S. Generally Accepted Accounting Principles (GAAP)? O The company's debts should be listed in order of their liquidity.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text: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 1
Year 2
Assets
Current assets:
Cash and equivalents
Accounts receivable
Inventories
Total current assets
Net fixed assets:
Net plant and equipment
Total assets
2,531
7,425
$16,875
$37,500
$5,535
2,025
5,940
$13,500
$16,500
$30,000
Liabilities and equity
Current liabilities:
Accounts payable
Accruals
Notes payable
Total current liabilities
Long-term debt
Total debt
Common equity:
Common stock
Retained earnings
Total common equity
Total liabilities and equity
$0
352
1,992
7,031
$9,375
18,281
$28,125
$37,500
$0
0
1,875
$1,875
5,625
$7,500
14,625
7,875
$22,500
$30,000
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.
Transcribed Image Text:This statement is
O The accruals balance decreased by $352 million between Years 1 and 2
O Total inventories of raw materials, work-in-process, and final goods increased from $5,940 million to $7,425 million between Year 1 and
Year 2
O Total inventories of raw materials, work-in-process, and final goods decreased by $1,485 million between Year 1 and Year 2
Statement #2: Over the past two years, Cute Camel Woodcraft Company has relied more on the use of short-term debt than on long-
term debt financing.
This statement is
because:
, because:
Cute Camel's total notes payable increased by $117 million, while its common stock account increased by $3,656 million
O Cute Camel's total current liabilities decreased by $469 million, while its long-term debt account decreased by $1,406 million
O Cute Camel's total current liabilities increased by $469 million, while its use of long-term debt increased by $1,406 million
This statement is
Statement #3: The book value per share of Cute Camel's stock in Year 2 was $562.50.
because:
O The per-share book value is calculated by dividing the company's total debt by the number of outstanding shares of common stock
O The per-share book value is calculated by dividing the company's total assets by the number of outstanding shares of common stock
The per-share book value is calculated by dividing the company's total common equity by the number of outstanding shares of common
stock
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)?
O The company's debts should be listed in order of their liquidity.
O The company's debts are listed in the order in which they are to be repaid.
O The company's debts should be listed from those carrying the largest balance to those with the smallest balance.
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