MC.Ch.20 - Practice MC for Chapter 20 Page 1 CHAPTER 20...

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Practice MC for Chapter 20 Page 1 CHAPTER 20 MULTIPLE CHOICE—Conceptual 26. 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 usually determined by an employee’s three highest years of salary 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. 30. The projected benefit obligation is the measure of pension obligation that a. is required to be used for reporting the service cost component of pension expense. b. requires pension expense to be determined solely on the basis of the plan formula applied to years of service to date and based on existing salary levels. c. requires the longest possible period for funding to maximize the tax deduction. d. is not sanctioned under generally accepted accounting principles for reporting the service cost component of pension expense. 32. Vested benefits a. usually require a certain minimum number of years of service. b. are those that the employee is entitled to receive even if fired. c. are not contingent upon additional service under the plan. d. are defined by all of these. 33. The relationship between the amount funded and the amount reported for pension expense is as follows: a. pension expense must equal the amount funded. b. pension expense will be less than the amount funded. c. pension expense will be more than the amount funded. d. pension expense may be greater than, equal to, or less than the amount funded. 36. The interest on the projected benefit obligation component of pension expense a. reflects the incremental borrowing rate of the employer. b. reflects the rates at which pension benefits could be effectively settled. c. is the same as the expected return on plan assets. d. may be stated implicitly or explicitly when reported. 38.
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MC.Ch.20 - Practice MC for Chapter 20 Page 1 CHAPTER 20...

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