In Pension Accounting, the Actuary's Main Purpose Is to

question 20

Multiple Choice

In pension accounting, the actuary's main purpose is to

• A) make predictions about mortality rates and employee turnover.
• B) calculate the current pension cost.
• C) calculate the interest cost of the pension plan.
• D) ensure the employer has established an appropriate funding pattern to meet its pension obligations.

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Definitions:

Acquisition Differential

The difference between the cost of acquiring a company and the fair value of its identifiable net assets.

Equity Method

An accounting technique used to record the investments in other companies, where the investment is significant but the investor does not have full control.

Patent

A legal right granted to an inventor for an exclusive period, typically 20 years, to exploit a new, useful, and non-obvious invention.

Consolidated Cash Flows

A statement merging the cash flows of a parent company and its subsidiaries to present the overall cash generated or used by the entire group.