1. In a defined-contribution plan, a formula is used that A) defines the benefits that the employee will receive at the time of retirement. B) ensures that pension expense and the cash funding amount will be different C) requires an employer to contribute a certain sum each period based on the formula. D) ensures that employers are at risk to make sure funds are available at retirement. 2. In a defined-benefit plan, a formula is used that requires that the benefit of gain or the risk of loss from the assets contributed to the pension plan be borne by the employec. defines the benefits that the employee will receive at the time of retirement. requires that pension expense and the cash funding amount be the same. defines the contribution the employer is to make; no promise is made concerning the ultimate benefits to be paid out to the employees. A) B) C) D) 3. In accounting for a defined-benefit pension plan A) B) C) an appropriate funding pattern must be established to ensure that enough monies will be available at retirement to meet the benefits promised. the employer's responsibility is simply to make a contribution each year based on the formula established in the plan. the expense recognized each period is equal to the cash contribution. the liability is determined based upon known variables that reflect future salary levels promised to employees. D) 4. In computing the service cost component of pension expense, the FASB concluded that A) the accumulated benefit obligation provides a more realistic measure of the pension obligation on a B) a company should employ an actuarial funding method to report pension expense that best reflects C) the projected benefit obligation using future compensation levels provides a realistic measure of D) The projected benefit obligation using current compensation levels provides a realistic measure of going concern basis. the cost of benefits to employees. present pension obligation and expense present pension obligation and expansion.
Answer
1. C) = required an employer to contribute a certain sum each
period based on the formula.
2. B) = defines the benefits that the employee will receive at
the time of retirement.
3. A) an appropriate funding pattern must be established to
ensure that enough monies will be available at retirement to meet
the benefits promised.
4. C) the projected benefit obligation using future compensation
levels provides a realistic measure of present pension obligation
and expense.