The Major Difference Between Accounting for Pensions and the Accounting

question 67

Multiple Choice

The major difference between accounting for pensions and the accounting for other postretirement benefits is that firms:

• A) do not need to report an excess of the accumulated benefits obligations over assets in a postretirement benefits fund as a liability on the balance sheet.
• B) do not need to disclose any estimates used in calculating projected benefits.
• C) postretirement benefits are normally not material for most companies and do not need to be disclosed.
• D) do not need to set aside funds for future postretirement benefits as they do for pension benefits.

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Definitions:

Without Replacement

A sampling method where each selected unit is not returned to the population before the next draw.

Characteristic

A trait or feature that defines or distinguishes a person, object, or phenomenon from others.

Probability

A measure of the likelihood that a particular event will occur, expressed as a number between 0 and 1.

Hypergeometric Probability

A statistical measure that calculates the likelihood of obtaining a specific number of successes from a finite population without replacement.