A Knife Made by Knife Co

question 29

Multiple Choice

A knife made by Knife Co.has a metal handle with no warning,and the manufacturer has received reports that some consumers have received electrical shocks when attempting to use the knife as a screwdriver while installing an electrical outlet.Athena is one such consumer and decides to sue the manufacturer and the seller.Which of the following is true of this situation?

• A)Athena can sue the manufacturer,since there is no specific warning label on the knife.
• B)Athena cannot file a suit as a warning label may not reduce the likelihood of an injury in case of a knife.
• C)Athena cannot file a suit against the manufacturer,since the danger presented by the product is obvious.
• D)Athena can bring a lawsuit against the manufacturer,stating that the warning on the product was inadequate.

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Definitions:

Incremental Borrowing Rate

The interest rate a lessee would have to pay to borrow on a collateralized basis over a similar term to lease a similar asset in a similar economic environment.

Liability

Financial obligations or debts owed by a company to external parties or individuals.

Balance Sheet

A financial statement that reports a company's assets, liabilities, and shareholders' equity at a specific point in time.

Deferred Tax Liability

Created when differences in financial reporting and tax reporting cause accounting income to be higher than tax income in a given period.