Which Statement Explains the Risk Involved in "Defined Benefit Plans

question 21

Multiple Choice

Which statement explains the risk involved in "defined benefit plans"?

• A)The plan places investment risk on employees since the future benefits are pre-specified.
• B)The plan sponsor never needs to increase its contributions to the pension trust.
• C)The plan may require the employee to pay $200 per month for each year of service.
• D)The plan specifies the eventual outflows from the pension trust to future retirees.

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Definitions:

Accounts Payable

A liability account that records amounts a company owes to suppliers for goods and services purchased on credit.

Statement Of Cash Flows

A financial statement that provides aggregate data regarding all cash inflows and outflows a company receives from its ongoing operations, investment, and financing activities.

Accounts Receivable

Money owed to a business by its customers for products or services delivered on credit.

Inventory

Refers to the goods and materials a business holds for the purpose of resale or production.