A City Does Not Choose to Advance Fund Its OPEB

question 30

Multiple Choice

A city does not choose to advance fund its OPEB plan but instead will continue to pay these postretirement benefits as they come due. The current year's benefit payments total $2,500. The total OPEB liability increased from $14,000 to $16,500 during the year. The General Fund would recognize an expenditure of

• A) $0.
• B) $2,500.
• C) $14,000.
• D) $16,500.

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Definitions:

Times Interest Earned Ratio

A financial metric that measures a company's ability to meet its debt obligations by comparing its income before interest and taxes to its interest expenses.

Income Before Taxes

Income before taxes is a measure of a company's profitability before any tax expense has been deducted from revenues.

Interest Expense

The cost incurred by an entity for borrowed funds over a period of time.

Return on Sales

A financial ratio that calculates how efficiently a company is at generating operating profit from its revenue.