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How Does a Defined Contribution Pension Plan Differ from a Defined

question 67

Essay

How does a defined contribution pension plan differ from a defined benefit pension plan? What are some of the advantages and disadvantages of each type of plan? How do they differ for accounting and financial reporting? Which type of plan would you prefer to belong to? Why?


Definitions:

Closing Entries

Journal entries made at the end of an accounting period to transfer the balances from temporary accounts to permanent ones, preparing the books for the next period.

End-of-Period Spreadsheet

A tool, typically in spreadsheet format, used at the end of an accounting period to compile adjustments and prepare financial statements.

Adjusted Trial Balance

A list of all the accounts and their balances after adjusting entries have been made, used to prepare financial statements.

Closing Entries

Journal entries made at the end of an accounting period to transfer the balances of temporary accounts to permanent ones, thereby preparing the temporary accounts for the next accounting period.

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