If a Company Estimates That Its Expected Return on Pension

question 75

Multiple Choice

If a company estimates that its expected return on pension plan assets will increase to 9.5% from 9.0%, this would be considered:

• A)an extraordinary gain.
• B)a change in accounting principle.
• C)a prior period adjustment.
• D)a change in accounting estimate.

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Definitions:

Net Profit Margin Percentage

A financial ratio indicating the percentage of revenue that remains as net income after all expenses, interest, and taxes have been deducted.

Equity Multiplier

The equity multiplier is a financial leverage ratio that measures the portion of a company’s assets financed by stockholders' equity, indicating financial risk.

Total Assets

The total of all assets owned by a company, including current and non-current assets, representing its value to shareholders.

Sales

Revenue generated from the selling of goods or services within a specific period.