Which of the Following Statements Characterizes Defined Benefit Plans

question 50

Multiple Choice

Which of the following statements characterizes defined benefit plans?

• A) They are comparatively simple in construction and raise few accounting issues for employers.
• B) Retirement benefits depend on how well pension fund assets have been managed.
• C) Retirement benefits are based on the plan's benefit formula.
• D) All of these.

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Definitions:

Acquisition Method

An accounting technique used to consolidate the financial statements of two companies after an acquisition.

Equity Method

An accounting approach used to reflect the value of an investment in another company, where the investment's value is adjusted based on the investor's share of the investee's profits or losses.

Par Value

The face value of a bond or stock as stated by the issuing company, which does not necessarily reflect its market value.

Fair Value

An estimated market value of an asset or liability, derived from current prices in an active market.