Which of the Following Describes a Defined Contribution Plan

question 27

Multiple Choice

Which of the following describes a defined contribution plan?

• A) Provides guaranteed income on retirement to plan participants.
• B) Employers and employees generally may contribute to the plan.
• C) Generally set up to defer income for executives and highly compensated employees but not other employees.
• D) Retirement account set up to provide an individual a fixed amount of income on retirement.

Identify and explain the need for adjusting entries and their effects on the accounting equation.

Recognize and differentiate between prepaid expenses, accrued expenses, and unearned revenues.

Understand and apply the concept of depreciation and its impact on financial statements.

Learn the classification and treatment of various types of adjusting entries in the accounting cycle.

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Definitions:

Interest Rate

The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding.

Present Value

The current worth of a future sum of money or stream of cash flows, given a specified rate of return.

Payment Stream

Payment stream refers to a series of payments made over time, such as in an annuity, loan repayments, or any regular monetary transfers.

Interest Rate

The proportion of a loan charged as interest to the borrower, typically expressed as an annual percentage.