TRUE/FALSE

Read each of the following statements and answer true or false. Explanation is NOT required.

1: With a defined contribution plan the risk of pension fund performance rests with the employees/retirees of the company, while with a defined benefit plan this risk rests with the company.

2: Three elements of pension expense for defined benefit plans are: service cost, interest cost, and actual return on plan assets.

3: If a company increases its expected rate of compensation increase for the purposes of calculating its pension obligations, the accumulated benefit obligation and the projected benefit obligation will both increase.

4: When analyzing postretirement benefits, one should evaluate the actuarial assumptions and their effects on the financial statements.

5: Actuarial gain or loss is the change in PBO that occurs when one or more actuarial assumptions are revised in estimating PBO.

6: Companies must report the economic pension cost in their financial statements.

7: Companies report the funded status of pension plans as a separate line item on the balance sheet.

8: An increase in the pension obligation because of passage of time is referred to as the interest cost.

9: Pension risk arises to the extent to which plan assets have a different risk profile than the pension obligation.

10: The cash operating cycle is the amount of days between making a sale and collecting money from customers.

11: LIFO provides a better match of current expenses to revenues on the income statement, while FIFO provides a better ending inventory figure by more closely reflecting current costs.

12: In a period of rising prices, using FIFO would produce a lower cost of goods sold than using LIFO.

13: All property, plant, and equipment must be depreciated over a period not to exceed forty years.

14: Depreciation is a valuation exercise.

15: An increasing accounts receivables balance is always a good sign as it means the company has more current assets and is more liquid.