acct 253 ch 20

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wsrdpc
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acct 253 ch 20
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2010-08-10 07:58:34
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acct 253 ch 20
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  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. requires an employer to contribute a certain sum each period based on the formula
    C. ensures that employers are at risk to make sure funds are available at retirement
    D. ensures that pension expense and the cash funding amount will be different
    B. requires an employer to contribute a certain sum each period based on the formula
    (this multiple choice question has been scrambled)
  2. Which of the following is not a characteristic of a defined contribution pension plan?
    A. the employer's contribution each period is based on a formula
    B. the benefits to be received by employees are defined by the terms of the plan
    C. the accounting for a defined contribution plan is straightforward and uncomplicated
    D. the benefit of gain or the risk of loss from the assets contributed to the pension fund are borne by the employee
    B. the benefits to be received by employees are defined by the terms of the plan
    (this multiple choice question has been scrambled)
  3. In a defined-benefit plan, a formula is used that
    A. defines the contribution the employer is to make; no promise is made concerning the ultimate benefits to be paid out to the employees
    B. requires that pension expense and the cash funding amount be the same
    C. requires that the benefit of gain or the risk of loss from the assets contributed to the pension plan be borne by the employee
    D. defines the benefits that the employee will receive at the time of retirement
    D. defines the benefits that the employee will receive at the time of retirement
    (this multiple choice question has been scrambled)
  4. In a defined benefit plan, the process of funding refers to
    A. determining the projected benefit obligation
    B. determining the accumulated benefit obligation
    C. making the periodic contributions to a funding agency to ensure that funds are available to meet retirees' claims
    D. determining the amount that might be reported for pension expense
    C. making the periodic contributions to a funding agency to ensure that funds are available to meet retirees' claims
    (this multiple choice question has been scrambled)
  5. In accounting for a defined benefit pension plan
    A. the expense recognized each period is equal to the cash contribution
    B. an appropriate funding pattern must be established to ensure that enough monies will be available at retirement to meet the beneftis promised
    C. the employer's responsibility is simply to make a contribution each year based on the formula established in the plan
    D. the liability is determined based upon known variables that reflect future salary levels promised to employees
    B. an appropriate funding pattern must be established to ensure that enough monies will be available at retirement to meet the beneftis promised
    (this multiple choice question has been scrambled)
  6. The relationship between the amount funded and the amount reported for pension expense is as follows:
    A. pension expense will be less than the amount funded
    B. pension expense may be greater than, equal to, or less than the amount funded
    C. pension expense must equal the amount funded
    D. pension expense will be more than the amount funded
    B. pension expense may be greater than, equal to, or less than the amount funded
    (this multiple choice question has been scrambled)
  7. Vested benefits
    A. are not contringent upon additional service under the plan
    B. usually require a certain minimum number of years of service
    C. are those that the employee is entitled to receive even if fired
    D. are defined by all of these
    D. are defined by all of these
    (this multiple choice question has been scrambled)
  8. 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 going concern basis
    b. a company should employ an actuarial funding method to report pension expense that best reflects the cost of beneftis to employees
    c. the projected benefit obligation using future compensation levels provides a relistic measure of present pension obligation and expense
    d. all of these
    • c. the projected benefit obligation using future compensation levels
    • provides a relistic measure of present pension obligation and expense
  9. In determining the present value of the prospective benefits (often referred to as the projected benefit obligation), the following are considered by the actuary:
    A. interest rates
    B. retirement and mortality rate
    C. all of these factors
    D. benefit provisions of the plan
    C. all of these factors
    (this multiple choice question has been scrambled)
  10. The unexpected gains or losses that result from changes in the projected benefit obligation are called
    asset gains & losses/liability gains & losses
    A. yes/yes
    B. yes/no
    C. no/no
    D. no/yes
    D. no/yes
    (this multiple choice question has been scrambled)
  11. The actual retrun on plan assets
    A. all of these
    B. includes interest, dividends, and changes in the market value of the fund assets
    C. is equal to the change in the fair value of the plan assets during the year
    D. is equal to the actual rate of return times the fair value of the plan assets at the beginning of the period
    B. includes interest, dividends, and changes in the market value of the fund assets
    (this multiple choice question has been scrambled)
  12. In accounting for a pension plan, any difference between the pension cost charged to expense and the payments into the fund should be reported as
    A. accrued or prepaid pension cost
    B. an offset to the liability for prior service cost
    C. an accrued actuarial liability
    D. a charge or credit to unrealized appreciation and depreciation
    A. accrued or prepaid pension cost
    (this multiple choice question has been scrambled)
  13. When a company adopts a pension plan, prior sevice costs should be charged to
    A. operations of current and future periods
    B. operations of the current period
    C. operations of prior periods
    D. retained earnings
    A. operations of current and future periods
    (this multiple choice question has been scrambled)
  14. Prior service cost is amortized on a
    A. straight line basis over the average remaining life of active employees or 15 years, whichever is longer
    B. straight line basis over 15 years
    C. straight-line basis over the expected future years of service
    D. years of service method or on a striaght-line basis over the average remaining service life of active employees
    D. years of service method or on a striaght-line basis over the average remaining service life of active employees
    (this multiple choice question has been scrambled)
  15. Unrecognized gains and losses that relate to the computation of pension expense should be
    A. recorded only if a loss is determined
    B. recorded currently and in the future by applying the corridor method which provides the amount to be amortized
    C. amortized over a 15 year period
    D. recorded currently as an adjustment to pension expense in the period incurred
    B. recorded currently and in the future by applying the corridor method which provides the amount to be amortized
    (this multiple choice question has been scrambled)
  16. Market related asset value is used to determine the corridor and to calulate the expected return on plan assets
    expected corridor/retrun on plan assets
    A. no/no
    B. yes/no
    C. no/yes
    D. yes/yes
    D. yes/yes
    (this multiple choice question has been scrambled)
  17. A pension fund gain or loss that is caused by a plant closing should be
    A. charged or credited to the current pension expense
    B. recognized as a prior period adjustment
    C. recognized immediately as a gain or loss on the plant closing
    D. spread over the current year and future years
    C. recognized immediately as a gain or loss on the plant closing
    (this multiple choice question has been scrambled)
  18. Which of the following disclosures of pension plan information would not normally be required by Statement of Financial Accounting Standards No. 132, "Employers' Disclosure about Pensions and Other Postretirement Benefits"?
    A. the funded status of the plan and the amounts recognized in the financial statements
    B. the rates used in measuring the benefit amounts
    C. the amount paid from the pension fund to retirees during the period
    D. the major components of pension expense
    C. the amount paid from the pension fund to retirees during the period
    (this multiple choice question has been scrambled)
  19. The main purpose of the Pnesion Benefit Guaranty Corporation is to
    A. require plan administrators to publish a comprehensive description and summary of their plans
    B. all of these
    C. require minimum funding of pensions
    D. administer terminated plans and to impose liens on the employer's assets for certain unfunded pension liabilities
    D. administer terminated plans and to impose liens on the employer's assets for certain unfunded pension liabilities
    (this multiple choice question has been scrambled)
  20. Which of the following statements is true about postretirement health care benefits
    A. the beneficiary is the retiree, spouse, and other dependents
    B. they are generally funded
    C. the benefit is payable monthly
    D. the benfits are well-defined and level in dollar amount
    A. the beneficiary is the retiree, spouse, and other dependents
    (this multiple choice question has been scrambled)
  21. Postretirement benefits may include all of the following except
    A. legal and tax services
    B. dental care
    C. tuition assistance
    D. severance pay to laid-off employees
    D. severance pay to laid-off employees
    (this multiple choice question has been scrambled)
  22. Which of the following statements is correct?
    A. the period over which postretirement benefits are accrued is called the attribution period
    B. all of these
    C. the accrual period generally ends on the date the employee is eligible to receive the benefits and ceases to earn additional benefits
    D. the accrual period generally begins when an employee is hired
    B. all of these
    (this multiple choice question has been scrambled)
  23. Which of the following is a significant item not recognized in the accounts and in the financial statements?
    A. all of these
    B. expected postretirement benefit obligation
    C. accumulated postretirement benefit obligation
    D. postretirement benefit plan assets
    A. all of these
    (this multiple choice question has been scrambled)
  24. The employer's pension expnese is the amount that it is obligated to pay to the pension trust in
    A. both defined benefit and defined contribution plan
    B. a defined contribution plan
    C. a defined benefit plan
    D. none of these
    B. a defined contribution plan
    (this multiple choice question has been scrambled)
  25. In a defined benefit plan, the funding level depends on all of the following factors except
    A. interest earnings
    B. turnover
    C. compension levels
    D. age of the employer company
    D. age of the employer company
    (this multiple choice question has been scrambled)
  26. A measure of an employer's pension obligation using future salary levels is the
    A. vested benefit obligation
    B. defined benefit obligation
    C. projected benefit obligation
    D. accumulated benefit obligation
    C. projected benefit obligation
    (this multiple choice question has been scrambled)
  27. Which one of the following is not a component of pension expense
    A. actual return on plan assets
    B. amortization of prior service cost
    C. amortization of projected benefit obligation
    D. gain or loss
    C. amortization of projected benefit obligation
    (this multiple choice question has been scrambled)
  28. All of the following increase pension expenses except
    A. interest on the liability
    B. actual return on plan assets
    C. service cost
    D. amortization of prior service cost
    B. actual return on plan assets
    (this multiple choice question has been scrambled)
  29. Which one of the following pension items is recognized in the employer's accounts and financial statements?
    A. projected benefit obligation
    B. unrecognized prior service costs
    C. pension plan assets
    D. none of these
    D. none of these
    (this multiple choice question has been scrambled)
  30. The FASB prefers that unrecognized prior service cost be amortized using the
    A. double decline balance method
    B. straight line method
    C. sum of the year digits method
    D. years of service method
    D. years of service method
    (this multiple choice question has been scrambled)
  31. The unrecognized net gain or loss balance must be amortized when it exceeds 10% of the larger of the
    A. ending accumulated benefit obligation or the market related asset value
    B. beginning projected benefit obligation or the market related asset value
    C. ending projected benefit obligation or the market related asset value
    D. beginning accumulated benefit obligation or the market related asset value
    B. beginning projected benefit obligation or the market related asset value
    (this multiple choice question has been scrambled)
  32. Which of the following losses should be recognized immediately?
    A. asset losses and liability losses
    B. losses that arise from a single occurrence such as a plant closing
    C. liability losses
    D. asset losses
    B. losses that arise from a single occurrence such as a plant closing
    (this multiple choice question has been scrambled)
  33. All of the following information should be disclosed in the notes to the financial statements except
    A. a reconciliation showing how the projected benefit obligation and the fair value of the plan assets changed during the period
    B. all of the options are disclosed
    C. the major components of pension expense
    D. the funded status of the plan and the amounts recognized in the financial statements
    B. all of the options are disclosed
    (this multiple choice question has been scrambled)

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