Which of the Following Statements Pertaining to Defined Benefit Pension

question 96

Multiple Choice

Which of the following statements pertaining to defined benefit pension plans is not correct?

• A)The funded status of a pension plan is an indicator of potential cash flow problems.
• B)Pension plan sponsors must make an annual contribution to the pension fund for an amount equal to the service cost regardless of the funded status of the pension plan.
• C)A small change in the pension discount rate can shift the funded status of the pension from year to year.
• D)Research provides evidence that firms with underfunded pension plans have lower current cash flows and are likely to have lower future cash flows relative to firms with overfunded pension plans.

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Definitions:

Punitive Nature

An aspect of legal judgments or actions intended to punish the wrongdoer, rather than simply to compensate for harm done.

UCC

Uniform Commercial Code, a standardized set of business and commercial laws that facilitate the fair conduct of transactions and dealings across state lines.

Statute of Limitations

A law that sets the maximum time the parties involved have to initiate legal proceedings from the date of an alleged offense.

Personal Injury

Personal injury involves harm caused to an individual's body, mind, or emotional well-being, due to someone else's negligence or intentional acts.