Which of the Following Statements About Defined Benefit Pension Plans

question 56

Multiple Choice

Which of the following statements about defined benefit pension plans is correct?

• A) Deferring actuarial gains and losses tends to smooth earnings.
• B) An overfunded pension plan increases a company's leverage.
• C) When the settlement rate is higher, the computed pension obligation increases.
• D) Expected return on plan assets increases pension costs.

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Definitions:

Inventory

A company's stock of goods or materials, held for sale or production.

Legal Purposes

The reasons or objectives that are recognized or considered by the law.

Accounting Purposes

The reasons or objectives for recording and reporting financial information, such as compliance with legal requirements and informed decision-making.

Separate Entity

A fundamental accounting principle that treats a business as distinct from its owners, creditors, or other businesses.