Which of the Following Characteristics Does Not Describe a Defined

question 69

Multiple Choice

Which of the following characteristics does not describe a defined benefit pension plan?

• A)Actuarial calculations are required to determine the employer's annual contribution.
• B)Upon retirement, the employee's pension amount depends on the value of her or his account.
• C)Forfeitures must reduce subsequent funding costs and cannot increase the benefits any participant can receive under the plan.
• D)A separate account is not required to be maintained for each participant.
• E)None of these.

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Definitions:

Chart of Accounts

A structured list of all the financial accounts used in the organization's general ledger.

Drawing and Capital Accounts

These refer to accounts used in partnerships and sole proprietorships where the 'drawing account' tracks withdrawals made by the owner(s) for personal use, and the 'capital account' tracks the owner's invested equity and retained earnings in the business.

Sole Proprietorship

A sole proprietorship is a business owned and operated by a single individual, where there is no legal distinction between the owner and the business entity.

Distribution of Cash

The process of allocating cash dividends to shareholders based on the number of shares held.