. Ladybug. Inc. reports the following ratios: Current ratio rnhoeoka be interpreted .80 IL The co interpreted as Curreat cash 12s The company II. The co cannot pay its current liabilities from current assets pay cannot pay its long-term liabilities from operating cash flow company can pay its current liabilities from operatingcvestors IV. The company's borrowing is a threat to creditors and long-term inves A) I & II B) II& IV C) I&III D) II & III E) None of the above 6. A company uses th e allowance method to account for bad debts. What is the total effeet on each of the following ng accounts of the collection of an account previously written off? Allowance for Accounts Increase No effect Increase No effect No effect No effect 7. Which of the following should be reported as a prior period adjustment to retained earnings? Change from Unaccepted Principle to Accepted Principle Yes Change in Estimated Lives of Depreciable Assets Yes No Yes No Yes No No b. 8. If common stock was issued to acquire an $8,000 machine, how would the transaction appear on the statement of cash flows? A) B) It would be a negative $8,000 in the financing section and a positive $8,000 in the investing section. It would not appear on the statement of cash flows but rather on a schedule of noncash investing and financing activities. It would be a positive $8,000 in the financing section and a negative $8,000 in the investing section. It would depend on whether you are using the direct or the indirect method. C) D)