You Manufacture a Diet Supplement That Has Been Declared Illegal

question 27

Multiple Choice

You manufacture a diet supplement that has been declared illegal in Europe, Canada, and the United States because it has been deemed unsafe. You receive interest from a retailer in Australia that would like to purchase $1 million of the product to sell in its stores. From what its people have heard, it's a great product and works well. They are not aware of the legal status of this product in other countries, and there is no prohibition against this product in Australia. Based on this information, what are the legality and ethics of selling to this retailer?

• A) legal and ethical
• B) legal and unethical
• C) illegal and ethical
• D) illegal and unethical

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Definitions:

Income Summary

An account in the closing process that summarizes revenues and expenses for a period, transferring the net result to owner's equity.

Retained Earnings

The portion of a company's profits not distributed as dividends but reinvested in the business or kept as reserve.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year, calculated by dividing current assets by current liabilities.

Permanent Accounts

Balance sheet accounts that carry their ending balances over into the next accounting period, such as assets, liabilities, and equity accounts.