When a Pension Plan Is Amended to Recognize Previous Service

question 88

Multiple Choice

When a pension plan is amended to recognize previous service of currently employed employees, what component of pension expense is created?

• A) transition costs
• B) amendment costs
• C) past service costs
• D) prior service costs

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Definitions:

Deferred Gross Profit

The portion of profit resulting from sales made on installment that is not recognized immediately but deferred to future periods.

Gross Profit

The difference between the revenue generated from sales and the cost of goods sold, indicating the basic profitability of a company's products or services.

Consignment-out

The process of sending goods to another party to sell on behalf of the sender, retaining ownership until the goods are sold.

Inventory Account

An account used to track the cost of goods available for sale or use, including items purchased for resale, raw materials, work-in-process, and finished goods.