Mattel,Inc

question 37

Multiple Choice

Mattel,Inc.had to recall 19 million toys because it learned that its manufacturer/supplier in China had used lead-based paint on the toys,a paint that is prohibited in the United States.Mattel:

• A)is not liable to purchasers of the toys for any injuries resulting from the lead because it did not manufacture the toys or authorize the use of lead paint.
• B)is not liable to purchasers because there is no privity of contract.
• C)is liable to purchasers as a manufacturer/seller of toys.
• D)can escape any liability because it was unaware of the lead paint use.

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Definitions:

Common Stock

Shares representing ownership in a company, entitling holders to vote at shareholder meetings and receive dividends.

Net Income

The conclusive earnings a company retains after all operational costs and taxes are taken away from the revenues.

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A financial document that provides a summary of the cash inflows and outflows for a company over a specific period of time, showing how it raises and spends money.

Operating Activity

Business actions involving the day-to-day operations that generate revenue and incur expenses in the production of goods or services.