Question
1. Which of the following statements describes a defined contribution pension plan? a. Investment risk is borne by the employer sponsoring the plan. b. The
1. Which of the following statements describes a defined contribution pension plan?
a. Investment risk is borne by the employer sponsoring the plan.
b. The accounting is more complex than that for defined benefit plans.
c. Present value amounts are used to estimate the employers obligation for the plan.
d. The employers obligation is satisfied by making required periodic contributions to the plan.
2. The portion of the obligation related to a defined benefit pension plan that participants are entitled to receive regardless of whether they continue to be employed with a company is known as the:
a. Historical benefit obligation
b. Projected benefit obligation
c. Accumulated benefit obligation
d. Vested benefit obligation
3. Which of the following is not a component of annual pension expense?
a. Interest on the projected benefit obligation
b. Amortization of prior service costs
c. Service cost
d. Actual return on plan assets
4. Which of the following is not a cash inflow from financing activities?
a. Issuance of stock
b. Purchase of treasury stock
c. Purchase of bonds
d. Payment of dividends
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