Question

ools 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 Fuzzy Button Clothing 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. Year 2 Year 1 $0 $0 352 0 1,992 Fuzzy Button Clothing Company 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 $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 $16,500 Total debt Common equity: Common stock Retained earnings ORI 1,875 $1,875 7,031 5,625 $7,500 $9,375 Activate Windo Go to Set 18,281 14,625 7,875 arch

Answer 1

Answer 1) This statement is False, because:
Accruals actually increased from $0 in year 1 to $352 Million at the end of Year 2.

Answer 2) This statement is True, because:
The funds recorded in Fuzzy Button's cash and cash equivalents account represent funds that are either cash or can be converted into cash almost immediately.

Working Note: Cash and Cash equivalents = $6919 (16875-2531-7425)