Which of the Following Statements About Defined Benefit Pension Plans

question 20

Multiple Choice

Which of the following statements about defined benefit pension plans is true?

• A)The expense is equal to the contribution amounts in a period.
• B)The contributions to the fund are equal to the benefits paid in a period.
• C)The expense is equal to the present value of the future benefit obligations incurred that period.
• D)The amount of benefits the employee will receive depends on the performance of the pension plan.

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Definitions:

Corporation

A legal entity that is separate and distinct from its owners, providing limited liability to its shareholders.

Suppliers

Suppliers are businesses or individuals that provide products or services to other businesses or consumers, typically as part of a supply chain.

Agency Problem

In corporations, managers are the agents of stockholders and are often able to take advantage of the relationship by diverting corporate resources to their own use. Excessive pay is the primary example. The general situation is described as the agency problem. Costs associated with controlling the agency problem are agency costs.

Ownership

The legal right or title to an asset or property, with the authority to use, sell, or lease it as the owner sees fit.