FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Transcribed Image Text:Question 19
Which of the following correctly describes defined benefit (DB) pension plans?
A- A typical example of DB plan is 401(K) savings account
B- Retirement benefits depend on how much money has accumulated in an individual's account.
C- Employers never need to report a liability related to DB plans
D- Retirement benefits are based on the plan benefit formula.
O A
O B
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- Explain and discuss the key accounting issues in determining the method of accounting for defined benefit pension plans.arrow_forwardAccounting for postretirement health care benefits is similar, in most respects, to accounting o O Multiple Choice O Payroll taxes. Health insurance costs for current employees. Pension benefits. Sick pay and vacation pay.arrow_forwardThe Employee Retirement Income Security Act (ERISA) was established to provide: Question 16 options: a) funding for retirement plans. b) mandatory retirement plans for self-employed individuals. c) protection to employees participating in private employer retirement plans. d) individual trust funds for employees retiring from jobs in the federal government. e) the ability to retain the same retirement insurance when employees change employers.arrow_forward
- Define the service cost component of the periodic pension expense.arrow_forwardThe Employee Retirement Income Security Act (ERISA) requires that companies fund defined-benefit plans, but no such requirement exists for other postretirement benefits such as health insurance. Evaluate whether there should be a requirement that other postretirement benefits be funded.arrow_forwardIn a defined-benefit plan, a formula is used that Select one: a. requires that the benefit of gain or the risk of loss from the assets contributed to the pension plan be borne by the employee. b. requires that pension expense and the cash funding amount be the same. c. defines the contribution the employer is to make; no promise is made concerning the ultimate benefits to be paid out to the employees. d. defines the benefits that the employee will receive at the time of retirement.arrow_forward
- S1: Under a defined contribution plan, the amount of a participant’s future benefits is determined by the contributions paid by the employer, the participant, or both, and the operating efficiency and investment earnings of the fund. S2: Under a defined benefit plan, the payment of promised retirement benefits depends on the financial position of the plan and the ability of contributors to make future contributions to the plan as well as the investment performance and operating efficiency of the plan. Only S1 is true None is true Only S2 is true Both are truearrow_forwardThe two main types of pension plans are defined benefit plans and defined contribution plans. Explain the difference between the two. How does the accounting for each differ?arrow_forwardIn the discussion of employees' pension plans, your book talks about two pension plans - Defined Contribution Plan and Defined Benefit Plan. Which one of the following is an example of Defined Contribution Plan? a. Section 529 Plan b. 401k C. HSA Plan d. FUTA е. None of the abovearrow_forward
- Which of the following are considered tax-sheltered annuity plans? Education IRAs Stock bonus plans . Profit-sharing plans. Money-purchase pension plans . 401(k) plans, Section 403(b) plans, and Section 457 plansarrow_forward6., RST Company offers a qualified retirement plan. Each employee contributes 4 percent of his or her pretax income to the plan, and RST matches each employee's contribution. An employee's benefit at retirement is determined by his or her account balance at the time of retirement. What type of retirement plan does RST offer? a. Defined contribution plan. b. Defined benefit, flat percentage of annual earnings c. Defined benefit, unit-credit formula. d. Defined benefit, flat dollar amount for all employeesarrow_forwardIndividual Retirement Accounts (IRAS) are: A. Self-directed retirement accounts set up by individuals, not your employer B. Are a type of a Defined Benefit Plan C. Both A & B D. None of the abovearrow_forward
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